The economic recovery in the UK is gaining traction: the most recent purchasing managers’ index for the construction service exceeded expectations and reached the highest level since 2007.
This enabled GBP/USD to make a second move above the previous 2013 high of 1.6380 and to tackle the high of 1.6440 seen earlier in the week, forming a double top. While the pound has been on the rise, it didn’t enjoy the rally one would expect on the background of non-stop excellent data. So, will cable fall off this double top? Or is this just part of the rough road up?
Here is how it looks on the chart:
1.6440 is the double top line. 1.6380 is the previous 2013 peak. The pair is currently trading at levels last seen in August 2011. Further resistance appears at around 1.6550, followed by 1.6620. Support below 1.6380 is at 1.6250.
Markit’s construction PMI scored 62.6 points, significantly above expectations for 59.3 points. The 50 point mark separates growth from contraction, and we can easily classify a score of over 60 as “strong growthâ€. This joins the manufacturing PMI released yesterday, that reached 58.4 instead of 56.5 expected. The last PMI comes from the largest sector, services, and this awaits us tomorrow.
The Bank of England hailed the recovery, sees a “glass half full†but left its commitment to low rates for a long time. It makes its rate decision on Thursday and no change is expected.
For more on the pound, see the GBPUSD forecast.
