UK construction… Better but not good enough
Skerdian Meta • 2 min read
After the jump in the UK manufacturing data yesterday the forex market was keen to see the UK construction data. I know I was. When manufacturing PMI jumped by four points yesterday the Brexit supporters were jumping up and down assuming that the negative effect of the Brexit vote was already over. But we know that this is not the end of the Brexit effects, it´s merely the beginning, as we elucidated yesterday in our post.
But, the jump in manufacturing activity mixed the things up a bit and made the post Brexit effects and the stage the UK economy is right now blurrier and less straightforward. That´s why the construction data today was important. Construction makes up for a small proportion of the UK economy, so this economic data is not the biggest market mover, but the place Britain is right now, gives it that extra bit of importance.
So, it was expected at 46.6 from 45.2 in July. It beat the expectations and came out at 49.2. That´s a nice jump but it´s not enough. GBP/USD had a little spike higher but has fallen back again, waiting for the US employment figures to be released this afternoon. Now, both sides can claim victory after the construction data.
The Brexiters can argue that the Brexit fears dented the investor sentiment in the recent months, but the fear is now wearing off and the economic activity is picking up as the numbers show. The anti-Brexiters will show you the construction data for the last three months which shows three months of contraction. That puts this sector officially in recession.
So, no victory for either side if you want to see the glass half empty, or victory for both sides if you see it half full. Anyway, I´m waiting for GBP/USD to creep higher, probably in the 1.3350 are, in order to open a long term sell forex signal. The risk/reward ratio is much favourably up there.