The Purchasing Manager's Index for the British construction sector slipped slightly last month, falling behind analysts' expectations. IHS Markit reported on Tuesday its UK Construction PMI came in at 52.2, while analysts held expectations for an unchanged reading of 52.5. According to IHS Markit's report, this drop reflected a slowdown in residential building activity, which offset a revival in both commercial and civil engineering sectors. The data showed a minor change in new business growth, due to consumers' budget constraints that also slowed hiring and created less demand for raw materials. In addition, companies reported weaker demand for subcontractors' services and noted that inflationary pressures continued to build in because of expensive imports and rising commodity prices.
Nevertheless, construction companies maintained a positive outlook for short-term growth prospects, referring to lower anxiety associated with Brexit and satisfactory macroeconomic data. Stronger consumer confidence also contributed to firms' optimism, which reached a fifteen-month high. In particular, almost half of the respondents claimed their business activity would likely improve, while 9% of the surveyed expressed strong pessimism on growth.
US ADP Non-Farm Employment Change is the main event today
GBP/USD set to retest the down-trend
The Cable weakened for the second day in a row yesterday, finding support in front of the tough demand area, represented by the weekly S1, the monthly PP, the 55 and the 100-day SMAs. The same cluster is now also reinforced by the 20-day SMA, bolstering the chance the Sterling is to rebound today. Technical indicators are also in favour of the positive outcome. The GBP/USD pair could even surge back above 1.25 and put the six-month down-trend to the test again. However, downside risks also persist, a driver for which would be the ADP data later today.
Daily chart
Hourly chart
Traders mostly bullish
Bullish traders' sentiment returned to its last Wednesday's level of 57%, whereas the share of purchase orders declined from 54 to 51% in the last 24 hours.
A less optimistic situation is observed elsewhere. The sentiment at OANDA is now neutral, but with bears outnumbering the bulls, namely 49% of all open positions are long and the remaining 51% are short. Meanwhile, sentiment at Saxo Bank strengthened over the day, with 69% of traders now being long and the other 31% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders still indecisive
By the end of the next three months traders believe the Cable is to rise above the 1.22 major level, as 53% of survey participants believe so. While the current price is around 1.25, the average forecast for July 05 is 1.2353. The 1.30-1.32 range is now the most popular price interval, having 15% of the votes, while on the second place is the 1.18-1.20 price range, with 13% of poll participants choosing it. Furthermore, the 1.14-1.16, the 1.20-1.22, the 1.24-1.26 and the 1.26-1.28 intervals were each selected by 9% of voters.