UK construction boosts Sterling

Following a spate of poor PMI figures adding to the pounds woes ahead of the expected interest rate cut on Thursday, yesterdays was a welcome change.

The pound managed to make some tentative gains across the board as construction PMI came out showing only a slight dip of 0.1 point off last month’s reading and over 2 points better than the forecast of 43.8. the level for growth in the sector is 50 so this reading showing a post Brexit level closer to growth than was expected is a welcome positive.

Despite EU PPI figures also posting an improvement to the forecasted levels the pound managed to make the gains against the single currency as well as the US dollar, while the single currency also made gains against the dollar ahead of the afternoons US inflation readings.

The inflation figures came out as expected so with little positivity from the figures, as a key indicator for interest rates and whether they may or not go up this month, the dollar continued to lose ground and the pound ended up a cent and a half up while the euro finished half a cent up against the greenback but a cent down against sterling.

Today is the turn of the Markit services PMI across the UK, Europe and the EU as a whole, plus the US at lunchtime. The European Central Bank have a non-monetary accounts meeting which generally has little impact on markets, while the US also releases some mortgage data later on.

The pound did well yesterday but with this is the last set of figures for the Bank of England to go on before releasing its policy decision tomorrow so any positive figure could give way to some opportune last minute buying levels before the rate setting decision release tomorrow. Get in touch with one of the Currency Index team this morning to discuss your options.