Sterling Fluctuates despite Positive Construction Output

January 6, 2016 - Written by Minesh Chaudhari

STORY LINK Sterling Fluctuates despite Positive Construction Output

UK Construction PMI Eclipses Expectations

Despite the fact that British economic data showed construction output significantly bettered estimates, the Pound failed to advance versus all of its major peers. December’s UK Construction PMI came in at 57.8 which eclipsed the median market forecast rise from 55.3 to 56.

Commenting on the report, David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement & Supply, said: “With both new orders and general business activity on the rise, this month saw a considerable spike in purchasing activity and the second fastest increase since January 2015, amidst an environment where suppliers struggled more as lead times lengthened.”

Next Holiday Sales Report Spooks Sterling Investors

The Pound fluctuated versus its major peers with as many registered gains as losses on daily trade. The lack of appreciation, despite the positive construction data, can be linked to a report from retail giant Next. Holiday sales were reportedly down significantly thanks to unseasonably warm weather. Many analysts are concerned that most high street stores will have suffered a similar, if not worse, fate to that of Next.

Neil Saunders, from retail analysts Conlumino, tweeted: "Next's lacklustre results do not bode well for the rest of the High Street; warm weather was the main source of its woes."

Services and Composite PMIs to Provoke Sterling Volatility

Later today the British Services and Composite PMIs will be very likely to provoke Sterling changes. Of particular significance will be the Services PMI given that the services sector accounts for the vast majority of British Gross Domestic Product. December’s Services PMI is predicted to decline from 55.9 to 55.6. Those invested in the British asset will be hoping that the Services PMI betters estimates in order to curtail concerns regarding tepid fourth-quarter sectoral growth.

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TAGS: Pound Sterling Forecasts