GBP/USD Rises on Good Construction PMI

Construction PMI in Britain scored 56.4 points . Early expectations were for a drop to 54.7. GBP/USD is now recovering early losses and escaping the support line.

Last month’s score was 56.5 points, showing healthy growth in this sector, after it fell to a contraction a few months ago, together with the services sector (released tomorrow). Towards the end of 2010, there were expectations that the construction sector will boost the economy.

The one sector that did push the economy forward was manufacturing. Purchasing managers’ index for this sector already passed the 60 point mark, meaning strong growth. But also this sector disappointed. Manufacturing PMI released last week, fell to 57.5.

There are many doubts about the strength of the British economy, also in the first quarter. A significant rebound was expected after Q4 was horrible, with a 0.5% contraction in GDP. This updated figure for March gives some hopes.

But this isn’t enough to create a rush and have the rate hike this week. It will probably wait.

GBP/USD started off the week with a rise to 1.6175, moving away from the 1.6110 support line. It fell towards the release, but managed to remain above 1.6110.

Levels to watch: 1.6110, 1.60 and 1.5940 on the downside, 1.6280 and 1.64 on the upside. For more levels, technical analysis and upcoming events, see the British Pound forecast.