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Release Explanation: The activity level of Purchase Managers. They are surveyed on production, employment, inventories, orders, and delivery data. The PMI is split into reads on Manufacturing, Service, and Construction industries. A read over 50 denotes growth. “As an indicator of economic performance the PMI has the ability to easily affect currency valuations as Institutions re-align existing positions, or build new ones, on the strength of these reports,” TheLFB-Forex.com Trade Team said.
TheLFB-Forex.com Trade Desk Thoughts: The U.K. Construction PMI increased more than expected for a third month in a row, maintaining the same strong expansion pace. May’s Construction PMI gained 7.8 points, to 45.9, after gaining 7.2 points just one month earlier. In February the index hit an all-time low.
TheLFB-Forex.com Trade Team said that the release points to a slowdown in the pace of contraction in the U.K. housing market, something that was also seen in the U.S. releases. However, the bottom in the construction sector is still far off, since the economy continues to lack credit and liquidity, and the current report shows that the construction sector is consolidating near record low levels.
Forex Technical Reaction: The pound declined 30 pips after the news release. During the European session, cable traded between the 1.6400 area and the neutral pivot point (1.6365)
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