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Pound Soft on Contracting Construction, Carney’s Comments

July 2, 2019 at 23:23 by Vladimir Vyun

Banknotes of ten British poundsThe Great Britain pound was one of the weakest currencies on the Forex market during Tuesday’s trading session. The likely reasons for that were poor domestic macroeconomic data and comments from the central bank’s chief.

The seasonally adjusted IHS Markit/CIPS UK Construction PMI fell sharply from 48.6 in May to 43.1 in June, whereas experts had promised an increase to 49.4. Being already below the neutral 50.0 level of no change, the index showed that the construction sector was contracting with increasing pace. In fact, that was the steepest rate of decline since April 2009.

The Nationwide House Price Index rose 0.1% in June, missing the average forecast of a 0.2% increase. Still, that was an improvement compared to the 0.2% decline registered in May.

Bank of England Governor Mark Carney said on Tuesday that trade wars can “shipwreck” the global economy. He stated:

The more hostile and uncertain trading environment is coinciding with sharp slowdowns in global trade, manufacturing, industrial production and capital goods orders. As a consequence, the quality of global growth has deteriorated. Across the G7, the growth rate of business investment has almost halved since its peak in late 2017, leaving the global expansion more reliant on consumer spending and reducing its resilience.

GBP/USD declined from 1.2638 to 1.2593 as of 23:21 GMT today. EUR/GBP advanced from 0.8929 to 0.8962. GBP/JPY tumbled from 137.02 to 135.85, basically erasing gains of the previous two weeks.

If you have any questions, comments, or opinions regarding the Great Britain Pound, feel free to post them using the commentary form below.

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