GBP: sterling is up again but inflation could be just around the corner

The pound continued to push higher against a basket of currencies as the construction Purchasing Managers Index (PMI) was released on Friday. Once again we saw solid growth in the sector, a characteristic that has been defying Brexit. Order books also improved at the fastest pace for eight months and construction firms hired new workers to match the rising demand.

However, we also saw the steepest rise in prices for more than five years. This is a stark reminder of the headwinds that the UK is going to be facing in the year ahead due to growing political uncertainty surrounding Brexit and the triggering of Article 50.

Looking at data, following last week’s less significant PMI, we have the headline figure out today which will focus on the service sector, the UK’s largest business sector, in addition to the British importers’ and exporters’ BRC retail sales monitor, Halifax house price and manufacturing production data.