In the space of a few days sterling has lost a couple of cents against the euro and nearly double that against the US dollar. Its struggle has continued at the outset of this week, falling against the vast majority of its 16 most traded partners. This was due in part to disappointing data, but also came about on the back of pessimism over the prospect of interest rate hikes. The purchasing managers’ index (PMI) from the manufacturing sector showed less expansion than anticipated, which sparked some losses from the currency. These were compounded by the belief that the Bank of England (BoE) will stick to low interest rates in their quarterly Inflation Report next week, despite the rapid decline of the unemployment rate towards the BoE’s 7% target. As a result, sterling fell against the euro by the biggest amount since March.
Today the second in the monthly PMI trilogy is due for release, this time from the construction sector. A secondary data consists of the house price index from Halifax.
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