U.K. Construction PMI Actual 34.5, Expected 28.8, Previous 29.3
Release Explanation: The activity level of Purchase Managers, they are surveyed on production, employment, inventories, orders, 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, on the strength of these reports.
Trade Desk Thoughts: The construction PMI rose sharply in January, up to 34.5, despite analyst expectations for a very poor read. Just one month ago, in December, the index hit a record low.
The sharp rise may have been influenced by the BoE's huge rate cuts, and the U.K. government's decision to support the mortgage market throughout its newly nationalized banks. Overall, the index still points to a contraction in the U.K. construction sector, that started almost one year ago. Almost every sub-index of the release points to a severe slowdown.
Forex Technical Reaction: The pound fell 30 pips after the news release. The pair tested the 1.4270 area during the European session, where the pound also topped one day earlier, in the U.S. session.