Sterling suffered a poor start to the week as investors pushed back their expectations on when the UK would raise interest rates. With falling oil prices and a struggling Eurozone putting a dampener on UK inflation, the consensus is that the Bank of England (BoE) will be less inclined to raise interest rates in 2015. With the Purchasing Managers Index (PMI) for manufacturing surpassing the consensus forecast to post a reading of 53, there is optimism that the more influential services growth data later in the week could spur a recovery for sterling. However, should it in fact disappoint, we could see further downward pressure applied to sterling.
Today sees the release of the UK construction Purchasing Managers’ Index (PMI), which should indicate positive growth in the industry. With 2014 proving to be a particularly strong year for construction, there will be hope that the first reading from 2015 shows similar positive growth signs.