British Construction PMI was a huge surprise. Adding to previous figures, British housing is clearly off the bottom. The Pound rallied after this release.
British Construction PMI jumped to 38.1 points, much much better than last month’s 30.9, and also far better than early expectations which stood on 31.9. This huge leap in Purchasing Managers Index marks a deep change.
British real estate developed into a bubble in the last years, as price houses in London were terribly high. The fall in house prices, construction and mortgages took the British economy down. Of course, the strong financial markets in London were also badly hurt, but a significant part of it is related tot he real estate market.
After many months of bad housing figures, good signs have come up lately. Last week’s Nationwide HPI fell by only 0.4%, much better than early expectations of a 1.2% fall.
Today’s tremendous Construction PMI was felt strongly in the GBP/USD:. The Pound crossed the magical 1.50 line, and kept on rising. It now trades at 1.5140.
The first quarter was terrible in Britain: GDP fell by 1.9%. It seems like the worst is over in the UK. The second quarter promises to be much better, with a nice head start, with one of the most troubled sectors: housing.
In the US, Housing is already above the bottom. Also across the Atlantic, the real estate bubble was one of the main reasons for the crisis (subprime anyone?). Now, also Britian shows strong signs of recovery.
So, it seems we are indeed seeing a comeback of the Pound.