By Chiara Albanese The pound held to its gains against the dollar and the euro Tuesday after data showed construction output in November rose at the fastest pace since August 2007. Sterling pushed up to a high of $1.6435 in European hours, just below a 16-month high of $1.6444 reached Dec. 2. The euro was trading at 0.8268 against the pound, just off a 10-month low of 0.8253 posted overnight. Data from Markit Tuesday provided further evidence of upward momentum in the U.K. economy as the construction purchasing managers index rose to 62.6 in November from October's 59.4. A figure above 50 indicates expansion. "The pound is shaping up to be one of the year's top performers. The push into new highs has been on the cards for some time. The recovery has come on in leaps and bounds to leave the U.K. firmly at the top of many a forecasters' growth league table for 2014 and beyond," said Neil Mellor, a currencies strategist at BNY Mellon. Elsewhere, the yen pared some of the losses posted overnight against the dollar, with the buck trading just below Y103 in Europe. Yen weakness accelerated after a media report suggested the Bank of Japan is working on contingency plans for further economic stimulus. The Australian dollar weakened modestly after the central bank kept its rates on hold overnight, confirming the currency is still deemed "uncomfortably high." The day ahead will be quiet in an otherwise very busy data calendar for the rest of the week. Accordingly, investors are expected to be in wait-and-see mode ahead of the key events to follow, which will include monetary policy decisions by the European Central Bank and the Bank of England.

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