According to Scotiabank’s FX strategist Shaun Osborne, UK Construction PMI data surged to 55.3 in July, up from 52.2 in June. This marks the strongest result in over two years. Despite this positive data, the Pound Sterling (GBP) continues to struggle, being the weakest-performing currency among the core majors today.
Osborne notes that the recent social unrest in the UK may be impacting market sentiment, contributing to the GBP’s lackluster performance. The currency has shown some resilience amidst yesterday’s volatility, but is now facing downward pressure, dipping below key support levels at 1.2700/10.
If the current trend continues, the GBP is likely to retest the late June lows around 1.2610/15, with resistance seen at 1.2840/50. Bears are pushing the currency towards the lower end of the range, highlighting the challenges faced by the Pound Sterling in the current market environment.
Analysis and Outlook
The strong performance of UK Construction PMI data in July indicates a positive trend in the construction sector, which could potentially boost economic growth. However, the weakness of the Pound Sterling suggests underlying concerns and challenges in the market.
Investors and traders should pay close attention to the GBP’s movements, especially in relation to key support and resistance levels. A break below 1.2610/15 could signal further downside for the currency, while a rebound above 1.2840/50 may provide some relief.
Overall, the combination of strong PMI data and currency pressure paints a complex picture of the UK economy. It is crucial for market participants to stay informed and adapt their strategies accordingly to navigate these uncertain times.