Better than expected growth in the construction industry spurred sterling to a day of gains against the euro yesterday but couldn’t prevent the British currency from slipping to a fresh eight plus month low against a surging US dollar.
The December Purchasing managers’ index (PMI) for the construction industry demonstrated a reverse from November’s unexpectedly poor figures, enabling sterling to strengthen against a number of currencies. Performance remained strong against the majority of its major trade partners throughout the day; however as the US dollar surged ahead of the release of minutes from the Federal Reserve monetary policy meeting tonight, support for sterling slipped against the American currency – pushing the GBP/USD rate down to a low not seen for nine months.
Focus will today shift to the release of the latest PMI for the UK services industry which are released this morning. With 70% of UK Gross Domestic Product (GDP) coming from this sector, this is set to be the most influential PMI release of the week.