A small disappointment: UK construction PMI slides to 60 points in May, a bit under expectations. It is important to note that a score of 60 still reflects strong growth. Markit’s purchasing managers’ index for the construction sector was expected to tick up from 60.8 in April to 61.8 in May. This sector has enjoyed the strongest growth and some even fear a bubble in the housing sector.
Once again, GBP/USD began a move prior to the publication, with the pair rising this time above 1.6780. Cable is now erasing the gains.
Yesterday, the manufacturing PMI came out at a strong 57 points, as expected. The comeback of UK manufacturing is certainly helpful in a broader recovery: one that is not based solely on rising house prices.
All in all, the UK economy looks quite robust with falling unemployment, stable inflation and positive prospects looking forward. The Bank of England meets this week, and is not likely to make any policy changes. It would like to let the current momentum run for more time.
Last week’s drop in the value of the pound is more related to the unsuccessful M&A activity: America’s Pfizer withdrew its bid for the UK’s Astrazeneca.
Tomorrow the UK releases the services PMI. Services is the largest sector. The current cable range is 1.6715 to 1.6772. For more, see the GBPUSD prediction.