Another day another concerning PMI reading from the UK. This time it was the construction sector which revealed a huge surprise to the downside. Forecasts were for a reading of 49.3, which would have still been a poor reading with the gauge remaining in contraction territory on a multi-month basis. To many participant’s shock, the actual reading printed at 43.1! Deeply into contraction and something which will go a decent way in alarming the Bank of England folk.
The pound immediately slipped after the numbers were released at 0930. The GBPUSD pair tested the $1.26 mark while sterling fell down to the low €1.11s against the shared currency. The pound stabilised into the afternoon session until Bank of England governor, Mark Carney, began a speech in which he gave off a more dovish tone than in other recent communications. The pound fell even lower, breaking the $1.26 handle against the buck and continuing its downward spiral versus many other counterparts.
It’s another big day for the UK. The main PMI is released today, one which represents the all-important services sector. Forecasts are for a reading of 51.0, still in expansionary territory. At the moment the bar is set low for this number, anything above the 50 level would likely been seen as positive given the last 2 days of data. However, anything below and the pound will have a big problem on its hands. The key downside support levels to watch include $1.25 (recent low) and €1.1110. (Recent low and equivalent. to 90p on EURGBP pair). If these break then watch out below! Buckle up…
Written by Viv Savani. 8:47am, July 3rd 2019
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