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UK construction PMI crashes – Brexit effect?

Markit’s construction PMI for the UK dropped sharply to 46 points, way below 50.5 expected and 51.2 seen in May. Purchasing managers’ indices are forward looking indicators. They imply future growth or in this case, contraction. A score  below 50  reflects contraction. The outcome is the worst since June 2009 – 7 years.

GBP/USD begins slipping down to 1.3260. All in all, trading is relatively stable as the US is on holiday today.

If tomorrow’s services PMI follows suit with falling into contraction territory,  we could see further falls. The services sector is the largest in the UK and the most critical one.

The UK is not alone of course. Also the Sentix  Investor Confidence in the euro zone crashed from 9.9 to 1.7 points, much worse than 8.1 expected. The expectations  component went into negative ground  and the  survey  clearly reflects Brexit. It was run between June 30th and July 2nd.

People that matter are certainly worried.

More: Brexit – all the updates in one place

Here is how the slide looks on the chart:

GBPUSD July 4 2016 down on construction PMI

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.