The Great British Pound continued to strengthen yesterday firstly during the Asian session touching a high of 1.3228 against the Greenback and then again during the European session to 1.3249 following the release of UK Construction PMI data which is a leading indicator of economic health.
The PMI for services and the composite PMI both improved for June, according to the Markit surveys. The services PMI improved from 54.0 in May to 55.1 in June. The composite PMI lifted from 54.5 in May to 55.2 in June. The reading was better than expected and showed the strongest growth in eight months. The improvement shown by the service sector, which accounts for just under 80% of GDP, suggested the economy would expand by 0.4% in the second quarter – double its rate of growth between January and March. Stronger growth of service sector activity adds to signs that the economy rebounded in the second quarter and opens the door for an August rate hike.
On the technical front, support is seen at 1.3220 followed by 1.3185 and resistance up at 1.3265 followed by 1.3300.
Looking ahead, the Bank of England Governor is due to speak in Newcastle, where volatility can often be experienced during his speeches as traders attempt to decipher interest rates clues.