The pound declined against its major counterparts in the European session on Tuesday, as UK construction sector unexpectedly grew at the weakest pace in six months in September.

Survey data from IHS Markit showed that the UK construction purchasing managers' index fell to 52.1 from 52.9 in August. In contrast, economists had expected the index to rise to 53.1.

A PMI reading above 50 suggests growth in activity.

The currency was also hurt by falling European shares, as a cold war loomed between the U.S. and China and an Italian lawmaker said the country's problems would be solved if it returned to its own currency.

Italian 10-year bond yields hit a new 4-1/2 year high on concerns the new coalition government could ramp up its anti-euro rhetoric.

In other economic news, data from Nationwide Building Society showed that UK house prices logged steady growth in September.

House prices grew 2 percent year-on-year in September, the same rate as seen in August. Prices were expected to climb 1.9 percent.

The currency traded mixed against its major counterparts in the Asian session. While it held steady against the franc and the euro, it fell against the greenback and the yen.

The pound slipped to an 8-day low of 147.22 against the yen and a 4-day low of 1.2737 against the franc, from its early highs of 148.72 and 1.2837, respectively. The next possible support for the pound is seen around 145.00 against the yen and 1.25 against the franc.

The pound fell to more than a 3-week low of 1.2957 against the dollar, from a high of 1.3049 hit at 9:15 pm ET. The pound is likely test support around the 1.27 area.

The pound edged down to 0.8893 against the euro, after rising to 0.8867 at 3:00 am ET. If the pound falls further, 0.90 is likely seen as its next support level.

Looking ahead, at 10:00 am ET, Federal Reserve Governor Randal Quarles will testify before the Senate Banking Committee in Washington DC.

Federal Reserve Chair Jerome Powell speaks about the outlook for employment and inflation at the National Association for Business Economics Annual Meeting in Boston at 12:45 pm ET.

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