This Sterling update discusses the latest PMI data and looks at how the latest UK Construction figures have affected GBP exchange rates this week. The table below displays the market movements for a number of GBP pairings in the last week:

Currency Pair% ChangeDifference on £200,000
GBPEUR0.96%€2200 EUR
GBPUSD0.63%$1780 USD
GBPAUD0.7%$2520 AUD
Disappointing US Housing and Consumer Confidence data

UK construction hit by bad weather

Bad weather caused UK construction to take a heavy hit last month, prompting the biggest falloff in construction data since after the 2016 Brexit vote, when construction firms were hit by over fears from foreign investment. The slump was to 47.0 from 51.4 the previous month, which was more than was anticipated and technically signals contraction within the industry. This is partly why the pound dropped so severely against most of its major counterparts in yesterday morning’s trading. Although construction only makes up around 6% of the British economic output, the sector is closely watched for links to long term investment and UK Gross Domestic Product. A reading as weak as this will be closely watched next month.

Whilst yesterday’s data proved to be a thorn in the side for Sterling, Sterling’s bounce-back ability is what really had investors talking.

Sterling’s day high actually came before the construction data, with GBPEUR reaching 1.1473. After the poor data Sterling dropped to 1.1414, however regained the majority of its losses and at the time of writing was sat comfortably at 1.1450.

The point from all this is that Sterling now seems to have some durability, following an extremely positive March. For clients that don’t know, positive news regarding UKEU transitional deals combined with positive rumours surrounding an interest rate hike in May helped to boost the pound. Reports are now indicating that Sterling may soon break the 1.15 resistance level and if this occurs, 1.15 – 1.17 on GBPEUR wouldn’t be out of the question in my opinion.

UK services PMI data today – what to expect

After a turbulent week so far in the PMI readings, all eyes are on the UK services PMI which accounts for the largest sector of economic output. 

A reading of 50.8 is expected today and if this deviates it could create a real problem for the pound if this is worse than expected. This would bring the overall PMI reading down even further which is likely to have a negative impact on Sterling. On the other hand, if this reading is better than expected, we could see a real boost for the pound and a platform to push on for the rest of the month.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.