EURGBP, H4
UK June construction PMI dove to 46.0, firmly and unexpectedly signalling that the sector is in contraction. This compares to the 51. 2 reading of May and the median forecast for a much more modest dip to 50.7. The 46.0 reading is the lowest level this series has seen since June 2009. Incoming new work fell by its steepest pace since December 2012. The survey found there has been a steep drop in residential building and the first decline in commercial work for the first time since May 2013. The survey is almost entirely a snapshot of conditions before the June 23 referendum on EU membership, and reflects caution in the sector ahead of the vote. Given the vote to leave and consequent political turmoil and uncertain economic future, the construction sector is likely to remain in decline over the coming months. The manufacturing PMI figure for June (also a pre-Brext vote snapshot), painted a much better picture, however, and focus will now be on the PMI survey of the big service sector, released tomorrow.
“Widespread delays to investment decisions and housing market jitters saw the UK construction sector experience its worst month for seven years in June. Construction firms are at the sharp end of domestic economic uncertainty and jolts to investor sentiment, so trading conditions were always going to be challenging in the run-up to the EU referendum. However, the extent and speed of the downturn in the face of political and economic uncertainty is a clear warning flag for the wider post Brexit economic outlook.”
GBPUSD fell below 1.3250 having been as high as 1.3296 earlier and EURGBP grinds higher to 0.8380.
Janne Muta
Chief Market Analyst
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