The pound’s bad week got even worse on Thursday, though the pace of its losses was much slower than over the previous few days. The GBP/USD exchange rate fell through a well-watched level of technical support from the February 9th low around 1.3785 and it traded all the way down to 1.3720 by lunchtime in New York. It finished the day up against both the Aussie and Canadian Dollars, however, to leave it off the bottom of our one-day table. With the USD under pressure after the President’s announcement on tariffs, GBP/USD has clawed its way back on to a 1.38 big figure during the European morning.
The UK construction PMI survey was released this morning. At 51.4 in February, it edged up from January’s four-month low of 50.2. This signaled a marginal increase in construction output during February, with the index also weaker than seen on average in 2017 (52.3). The data pointed to a continuation of the subdued growth conditions reported across the UK construction sector at the beginning of 2018. Total business activity increased only marginally during the latest survey period, while new work decreased for the second month running. Markit reported, “Anecdotal evidence suggested that fragile business confidence and ongoing political uncertainty remained key factors holding back client demand. At the same time, strong input cost pressures were reported in February, with higher raw material prices, fuel bills and staff wages reported by survey respondents.”
Prime Minister Theresa May is scheduled to give a major speech at lunchtime, in which she is due to outline the government’s plan for a new post-Brexit relationship with the EU. The very bad weather across the UK has caused the speech to be moved from Newcastle to the Mansion House in London. Briefings suggest she will make clear that Britain is aiming at a free-trade deal with Brussels, not a customs union, but will insist it should be “the broadest and deepest possible agreement, covering more sectors and cooperating more fully than any free trade agreement anywhere in the world today”. As ever, what matters more is the reaction in Brussels…The British Pound opens in North America at USD1.3785, GBP/EUR1.1200 and GBP/CAD1.7730.