Sterling lost ground against a resurgent dollar on Wednesday, after data showed US companies were hiring at a much faster pace than expected while activity in the UK construction sector contracted last month. The jobs report brightened the outlook for the US economy, while a monthly construction index suggested Britain's economy was on shaky ground and backed expectations that domestic interest rates are likely to remain on hold despite sticky inflation.
US private employers added 297,000 jobs in December, three times economists' median estimate and up from a gain of 92,000 in November, an ADP Employer Services report showed. "Those ADP numbers led to an acceleration in the dollar's rebound," said Ian Stannard, senior currency strategist at BNP Paribas. "Despite sterling holding well on the crosses, it has lost ground against the dollar and it can head back towards the $1.5370 level in the coming days."
Sterling was down 0.6 percent at $1.5487, having fallen to $1.5478 after the US data. It was an outperformer on Tuesday, rising as high as $1.5646 after UK manufacturing sector PMI surprised on the upside. But Wednesday's monthly Markit/CIPS purchasing managers construction index fell to 49.1 from November's unrevised reading of 51.8, and a much sharper decline than economists' forecasts of a reading of 50.9.
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