The UK construction sector is growing at a slower pace than expected. At 60.8 points in April, this is still strong growth, but not as strong as in March and below expectations. Markit’s construction purchasing managers’ index for April was expected to tick down from 62.5 to 62 points, still reflecting very strong growth. This sector led the current growth cycle and stood above other PMIs.
GBP/USD traded just under 1.69 towards the publication, consolidating previous gains. The immediate reaction was a slide to 1.6872, but the pound erases most of the losses. Volatility in markets remains poor. One of the reasons is that the US Non-Farm Payrolls is awaiting.
Yesterday, manufacturing PMI beat expectations and this sent GBP/USD to 1.6919, a new 4.5 year high. The British economy grew by 0.8% in Q1 and prospects look positive for Q2 as well.
The round number of 1.70 looms above. 1.6840 provides support. For more, see the British pound prediction.
On Tuesday, Markit publishes the services PMI. The services sector is the largest in the UK and this publication tends to have a significant impact on the pound.
