Forex News: Sterling Rises as UK Construction Activity Expands
THE TAKEAWAY: UK construction PMI for October rises to 50.9 -> Report is very pessimistic despite expansion -> Sterling rises
Following two months of reduction, UK construction activity expanded in October according to Markit’s Purchasing Managers’ Index. The construction PMI was reported at 50.9, beating expectations for an index result of 49 and higher than last month’s 49.5 index result. A PMI result below 50.00 indicates deterioration in activity.
Civil engineering saw a rise in construction output, while residential output was the weakest area of construction, and commercial activity was marginally reduced. New order volumes for construction were lower which led to lower employment in the industry.
Markit’s Senior Economist Tim Moore said that, ‘the bigger picture remains bleak given ongoing falls in new orders alongside renewed job cuts across the sector over the month.’
Yet despite some of the pessimism in the report, Sterling climbed higher in forex trading on the surprising index level. GBPUSD climbed above 1.6100 following the release of the forex news. Resistance could be provided by a two week high around 1.6174.
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