Why is the Pound up today when the UK economy is going down the …
The construction sector has been the best performing sector of the UK economy. This sector bounced off right after the 2008 global financial crises. While it took a lot longer for the rest of the other sectors in the UK and in other countries (Japan is in recession and different sectors are still in contraction in certain countries of the Eurozone), the construction sector has been outstanding. Most of the time the PMI indicator has shown that this sector has been in the 55-60 point region which meant a nice expansion.
Today the number which shows the data collected in July was disappointing. The number was below 46 point which puts this sector for the second month in contraction. It is a terrible number but at least it came above expectations. That seems to have discouraged the GBP sellers and after an initial tumble, GBP/USD has jumped back up. This move has three reasons:
1 – The USD weakness which we have been seeing all day today across the board, is helping push this pair up
2 – The BOE (Bank of England) monthly meeting is coming up on Thursday so some trader might feel cold feet
3 – The GBP/USD bears which have been selling from 1.50 and 1.40 are feeling a bit itchy because the price is failing to make a substantial break below 1.30. So they are taking profit (closing) on some shorts (sell positions) and will probably look for better opportunities to sell higher.
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