Both the Pound to Euro (GBP/EUR) exchange rate and GBP/USD pairing were little-changed following the publication of UK Construction Output figures.
The GBP/EUR pairing was trading in the region of 1.2593, just below technical resistance of 1.26, while the GBP/USD pairing remained trending above 1.71.
While Sterling came under some pressure yesterday after the UK’s trade balance figures showed an unexpected widening in the nation’s deficit, during Friday’s European session the Pound held its ground in spite of a surprising fall in construction output.
The UK’s Construction Output report for May showed a seasonally adjusted month-on-month decline of -1.1%. This almost wiped out the previous month’s 1.2% gain and defied expectations for an increase of 0.9%.
On the year domestic construction output was up 3.5% rather than the 5.6% anticipated.
Earlier this week the UK’s Manufacturing and Industrial Production reports also disappointed expectations, leading some investors to believe that Britain’s seemingly unflappable economic recovery might have hit something of a roadblock.
The report stated: ‘In all new work the largest contribution to the fall came from private commercial work and public other new work. New work public housing and private industrial work increased, but due to the relatively small size of these work types, the increases did little to offset the falls elsewhere. Compared with May 2013, output in the construction industry increased by 3.5%. All new work and repair & maintenance both increased by 3.7% and 3.1% respectively. Housing new work provided the largest contribution to the increase in all new work compared with May 2013, with both public and private housing seeing substantial increases of 29.3% and 16.8% respectively. This resulted in all new housing increasing by 19.4%. Private industrial new work also increased compared with 2013. There were notable year-on-year falls in infrastructure, public other new work and private commercial.’
As some industry experts have argued that a little blip in fundamentals is unlikely to prevent the Bank of England from bringing forward the timeline for raising interest rates, the Pound to Euro (GBP/EUR) exchange rate and GBP/USD pairing was barely affected by the news.
The Euro remains under pressure following yesterday’s concerning development in the Portuguese banking sector and the Common Currency was static after Germany’s final Consumer Price Inflation data for June was unaltered.
Some GBP/USD movement could occur before the weekend depending on the content of the US Monthly Budget Statement.
Economic reports for the UK to be aware of next week include; the British Retail Consortium’s Like-for-Like Sales, the UK Consumer Price Index/Producer Price Index and (most influentially) UK employment figures.
The UK’s labour market has gone from strength to strength over the last six months, and another strong decline in joblessness could be just the impetus the Bank of England needs to outline a more definitive timeline for the increasing of interest rates.
Of course volatility in the Pound to Euro (GBP/EUR) exchange rate could also be inspired by the Eurozone’s own inflation figures.
Pound (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.7132,
Pound Sterling,,Euro,1.2588,
Pound Sterling,,Australian Dollar,1.8229,
Pound Sterling,,New Zealand Dollar,1.9421,
US Dollar,,Pound Sterling,0.5839,
Euro,,Pound Sterling,0.7944,
Australian Dollar,,Pound Sterling,0.5485,
New Zealand Dollar,,Pound Sterling,0.5146,
[/table]
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