Investing.com - The pound was down against the dollar on Tuesday after data showed a slower pace of growth in the construction sector for the month of June.
GBP/USD was 1.2923, down 0.13% at 09.35 BST following the previous session close of 1.2940.
On Thursday last week, the pound rose above $1.30 for the first time since the general election result on 8 June. It reached $1.3029 on Friday, its highest level since 23 May. Slower manufacturing growth figures on Monday pulled the pound below the 1.300 mark.
Figures from the Chartered Institute of Purchasing and Supply (CIPS) Construction Purchasing Manager’s Index (PMI) showed the construction industry was growing, however at a slower pace than forecast. Construction growth slowed to 54.8, down from a seventeen-month high the previous month. The forecast rate was 55.0.
UK GDP growth for the first quarter was just 0.2%. Weaker than expected manufacturing and construction growth for June dampens hopes for a rebound in the economy in Q2.
Investors will be looking for the services PMI data release on Wednesday, as it is viewed as a better gauge of the economy's performance.
The UK government is currently in recess for summer. However, Prime Minister Theresa May is under increasing pressure. A government report yesterday showed the extent of a decade of public sector pay freezes, and reignited the opposition Labour Party’s argument to lift the Conservative 1% pay cap on public sector staff.
Calls for an end to the austerity programme were backed by senior members of the Conservative Party, showing a weakening in the Prime Minister’s position.
The US dollar was steady with markets in the US closed for 4 July celebrations. The US dollar index was 96.00, up 0.05% from the previous session close. The dollar index (DXY) measures the greenback's strength against a basket of 6 major currencies.
The euro moved up slightly against the pound by 0.06%. EUR/GBP was 08788, just below the 0.8888 level. Euro-zone data on Monday showed the manufacturing sector had grown at a better than expected rate, further strengthening the single currency.
The Reserve Bank of Australia announced no increase on interest rates on Tuesday morning. A dovish statement from the bank brought the Aussie lower against major currencies. GBP/AUD was up 0.59% at 1.6988.
GBP/NZD edged up 0.07% to 1.7755.
Against the Canadian dollar the pound dropped 0.23%. GBP/CAD was 1.6790 on Tuesday morning.
Sterling was steady against the Swiss Franc. At 1.2466, GBP/CHF was down just 0.02%.
The safe haven Japanese yen made gains on Tuesday morning following a missile test by North Korea. GBP/JPY was down 0.26% at 146.31.
The FTSE 100 was down 0.16% at 7,365.50.
Hawkish comments from the Bank of England, particularly chief economist Andy Haldane, supporting an interest rate hike lifted the pound last week. BoE governor Mark Carney’s comments at the ECB meeting of central bankers in Portugal last week also drove the pound up. He called for a review on monetary policy before the end of the year.
Comments from other Bank of England officials show the division within the MPC on monetary policy. Gertjan Vlieghe retained his dovish stance on keeping rates at their historic low, whereas Ian McCafferty called for a hike.