- UK Construction PMI continues to decline
- British pound soars on soft US nonfarm payrolls
The British pound is steady at the start of the week. In the North American session, GBP/USD is trading at 1.2396, up 0.14%.
UK Construction PMI declines
UK Construction PMI declined for a second straight month in October, with a reading of 45.6. This was a slight improvement from the September reading of 45.0 but fell short of the market consensus of 46.0. Last week, the Manufacturing and Services PMIs for October indicated contraction, with readings below the 50 level. This points to weak business activity across the UK economy, as elevated interest levels continue to filter through the economy and dampen growth.
US nonfarm payrolls misses forecast, US dollar slides
The US dollar fell sharply against the major currencies after Friday’s soft nonfarm payroll report. The October reading of 150,000 was down sharply from a downwardly revised 297,000 in September and shy of the consensus estimate of 170,000. The sharp deceleration points to cracks in the US labour market and the banner September nonfarm payroll report appears to have been a temporary spike. Investors are confident that the current tightening cycle is done, which has sent the US dollar broadly lower. The pound soared 1.44% against the US dollar on Friday, rising to its highest level since September 20th.
The Fed rate odds of a hike in December have fallen in the past week from 24% to 10% and there is an 80% probability of a rate cut as soon as June, according to the CME’s Fed Watch Tool. Traders will be paying close attention as a host of Fed policy makers, including Fed Chair Jerome Powell, speak this week.
- There is resistance at 1.2483 and 1.2587
- There is support at 1.2312 and 1.2247
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