* Sterling hits one-month high versus the euro
* U.S. employment data at 1230 GMT to dictate currency moves
* Better data lowers bets on more stimulus by the BoE
By Anooja Debnath
LONDON, Nov 2 Sterling rose to a one-month high
against the euro on Friday, helped by better-than-expected UK
construction activity data that added to optimism about a
sustained economic recovery.
The euro fell 0.3 percent against the pound to
hit 79.965 pence, its weakest since Oct 3. Euro zone exporter
bids are cited at 79.80/90 pence, traders said, with losses in
the euro likely to gather pace if it closes below its 55-day
moving average of 80.09 pence on Friday.
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.
The Purchasing Managers' Index (PMI) for construction
activity in the UK rose above expectations to 50.9, which
indicated expansion in the sector, but firms remained cautious
about future growth, according to the survey.
"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 climbed out of
recession although there are doubts about the underlying
strength of the economy.
Ali said the market focus would turn to the U.S. employment
figures due at 1230 GMT on Friday and going forward to the
A better-than-expected jobs report could boost risk appetite
and sterling while a disappointing number could hurt the pound
and the euro.
"The dollar tends to weaken if we see better data and there
is a chance we could see some euro weakness after the data,"
said Peter Kinsella, currency strategist at Commerzbank.
The euro has been under pressure as the crisis in the
currency bloc rages on and a Greek court ruled the country's
austerity measures may be unconstitutional, raising concerns
about Athens' ability to implement austerity measures needed to
secure bailout money.
Sterling slipped against a broadly stronger dollar before
the U.S. jobs data. The pound was down 0.2 percent
against the dollar to $1.6094. Near-term support is seen at its
55-day moving average of $1.6035 while offers are layered above
The pound has been in demand from Asian central banks and
other long term investors in recent days following hopes the UK
recovery will gather pace and douse expectations of more easing.
Friday's UK construction figures followed a recent slew of
better-than-expected consumer credit, mortgage, CBI retail sales
apart from the forecast-busting growth data.
Comments from BoE deputy governor Charlie Bean on Wednesday
chimed with a recent lowering of expectations that the central
bank will opt for more quantitative easing (QE) next week,
providing support for the pound.