Although yesterday’s manufacturing report for the UK surprised to the upside, Pound gains were limited as Ukrainian concerns dominated market movement and investors looked ahead to Thursday’s Bank of England policy meeting.
As the European session began the Pound was little changed against rivals like the US Dollar and Euro.
However, the British currency went on to post modest gains against the ‘Greenback’ as developments in Russia reduced demand for safe-haven assets and a report showed that British construction output accelerated sharply in February.
Although the pace of construction output eased slightly, with the Markit PMI slipping from 64.6 in January to 62.6 in February, activity still rose for a tenth month and job creation in the sector rose to a three-month high.
Economists had forecast that the measure would come in at 63.2.
The Markit report indicated that firms had a positive attitude regarding expectations for future business activity and that residential construction enjoyed another month of steep expansion.
Roughly 59 per cent of construction companies now expect to see an increase in output in the year ahead. Only 10 per cent envisage a reduction.
In February civil engineering was the construction sector’s best performing area.
In a statement accompanying the data Markit economist Tim Moore asserted; ‘Construction output growth succumbed somewhat to the recent wet weather, with temporary disruptions from heavy rainfall most acute for house building activity in February […] While some froth has come off overall construction growth in February, the latest data showed that job creation picked up to a pace rarely seen since the summer of 2007. […] As a result, there appears an undiminished depth of belief among construction companies that strong growth will be sustained this year, helped by more favourable economic conditions and an ongoing house building recovery.’
The Pound also advanced on the Euro after the report was released.
GBP/EUR gains were aided as Eurozone producer prices were shown to have fallen by more than expected in January, edging down by 0.3 per cent month-on-month rather than dropping the 0.1 per cent expected.
A lack of significant economic news for the US may limit further currency market movement today, although any developments in the Ukraine will be closely monitored.
Tomorrow Sterling movement may be triggered by the UK’s services PMI, although Halifax house price data and the British Retail Consortium shop price index will also be of interest.
However, we forecast that the Pound Sterling exchange rate may experience only minimal movement ahead of the Bank of England’s policy meeting on Thursday.
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,1.6696 ,
Pound Sterling,,Euro,1.2142,
Pound Sterling,,Australian Dollar,1.8648,
Pound Sterling,,New Zealand Dollar,1.9935 ,
US Dollar,,Pound Sterling,0.5987,
Euro,,Pound Sterling,0.8236,
Australian Dollar,,Pound Sterling,0.5360,
New Zealand Dollar,,Pound Sterling,0.5022,
[/table]
Comments are closed.