* Euro falls to one-month low below 80 pence
* Better data cuts bets on more stimulus from BoE
* Strong U.S. jobs data lifts dollar broadly
By Anooja Debnath
LONDON, Nov 2 Sterling hit a one-month high
against the euro on Friday, helped by better-than-expected UK
construction activity data that added to optimism about
prospects for an economic recovery.
The pound retreated against a broadly stronger dollar
however, after stronger-than-expected U.S. jobs data brightened
the outlook for the world's largest economy.
UK construction PMI data for October rose above expectations
to 50.9, which indicated expansion in the sector, although firms
said they remained cautious about future growth.
The euro fell to 79.96 pence, its weakest since
Oct 3, before paring losses to last trade down 0.2 percent on
the day at 80.06 pence. Traders cited euro zone exporter bids at
In contrast to the upbeat UK report, data showed euro zone
manufacturing shrank for the 15th month running in October as
output and new orders fell.
"Today's data has restored and refreshed sterling's post
third quarter GDP rally," said Nawaz Ali, UK market analyst with
Western Union Business Solutions.
"Weak manufacturing PMI data yesterday had led traders to
question the sustainability of any recovery going into the
fourth quarter but today's data is certainly a positive
Data last week showed the UK economy had emerged from three
quarters of recession, prompting many market players to cut bets
on further monetary easing from the Bank of England next week.
In contrast, the euro zone economy almost certainly slipped
back into recession in the third quarter, with only feeble
growth expected next year.
The single currency has also come under pressure from
uncertainty about when Spain might ask for a bailout, and
concerns about Greece's ability to implement austerity measures
needed to secure more financial aid.
U.S. JOBS BEAT FORECASTS
Sterling fell 0.5 percent versus the dollar to $1.6039 after
U.S. non-farm payrolls showed 171,000 jobs were added last
month, beating expectations for 125,000.
The pound had rallied to a two-week high of $1.6176 on
Thursday, and market players said some investors were taking
profit on those earlier gains.
Sterling has been in demand from Asian central banks and
other long-term investors in recent days following hopes the UK
recovery will gather pace.
Friday's UK construction figures followed recent
better-than-expected consumer credit, mortgage and CBI retail
The next focus for investors is PMI data from the dominant
services sector on Monday, followed by a BoE rate decision on
Thursday, when policymakers will also announce whether they are
expanding their 375-billion-pound asset purchases programme.
"A few bits of data have been positive and that's been the
trigger for people to pull back on (easing) expectations. I
think it will be mildly positive for sterling," said Michael
Sneyd, FX strategist at BNP Paribas.
Monetary easing tends to be considered a negative for a
currency as it increases the supply.