The Pound Exchange Rate continues to make gains against the Euro, US Dollar and other major peers as today’s Construction PMI advanced to a four-month high, increasing optimism that the UK economy is on track to hit pre-recession levels.
A surge in home-building meant that construction activity in the UK grew by its fastest pace in four months last month, beating economist forecasts for a slowdown and adding to a run of strong economic data releases.
According to the monthly Markit/CIPS purchasing managers index (PMI) construction activity climbed to 62.6 in June, up from May’s figure of 60.0 and was the highest level seen since February and well above expectations for a drop to 59.5.
Today’s report adds to the Official data released last week which showed that Britain’s construction output rose by 1.5% in the first quarter of the year and was 6.7 % than a year earlier.
The increase was the biggest annual rise seen in three years. The PMI figures pointed to ongoing momentum in the sector, with new orders coming in at the fastest rate since January.
Following the release of the data the Pound advanced to its highest level since October 2008. Against the US Dollar the currency advanced to $1.7169. Against the Euro it pushed further above the key 1.25 level.
“Construction companies started the summer with another surge in house building and commercial activity. The survey suggests that the sector expanded more than 1% in the second quarter after being driven by improvements in the underlying health of the UK economy,” said Tim Moore, an economist at Markit.
Today’s positive data adds to yesterday’s data which showed that manufacturing activity in the UK soared to a seven-month high in June and showed that hiring in the sector climbed to a 20-year high.
With the latest UK data continuing to come in strongly economists will be raising their bets that the Bank of England could issue an interest rate rise before the end of the year.
Expectations that the BoE will be the first major Central Bank to raise rates has provided the Pound with strength over the last few months.
Tomorrow’s services PMI is also likely to send the Pound higher if it follows the pattern of stronger than expected data.
Pound (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.7173 ,
Pound Sterling,,Euro,1.2572 ,
Pound Sterling,,Australian Dollar,1.8157 ,
Pound Sterling,,New Zealand Dollar,1.9572 ,
US Dollar,,Pound Sterling,0.5823 ,
Euro,, Pound Sterling ,0.7952 ,
Australian Dollar,, Pound Sterling ,0.5514 ,
New Zealand Dollar,,Pound Sterling,0.5104 ,
[/table]
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