Pound Drops After Britain’s Construction Contracts Unexpectedly

The Great Britain pound dropped today after Britain’s construction sector unexpectedly contracted last month, causing worries about the state of the country’s economy and speculations that the Bank of England may refrain from tightening its monetary policy in the near future.

The seasonally adjusted IHS Markit/CIPS UK Construction Purchasing Managers’ Index fell from 51.1 in August to 48.1 in September. A reading below 50.0 indicates contraction of the sector. It was the lowest reading since July 2016 and the steepest decline since last year’s Brexit vote. Experts were completely unprepared for that as they were anticipating the indicator to stay unchanged.

GBP/USD declined from 1.3273 to 1.3232 as of 12:30 GMT today, touching the lowest level since September 14. GBP/CHF dropped from 1.2939 to 1.2893 after rallying to the daily high of 1.2981.

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