Pound Falls on Weak UK Construction PMI, Rallies on New Brexit Proposals

The British pound today recovered from its daily lows and rallied higher in the late London session as details emerged of a new Brexit proposal by the British government. The European Union’s positive response to the proposals boosted investor confidence in the pound, causing it to rally higher despite the weak UK PMI released earlier today.
The GBP/USD currency pair today fell to a low of 1.2228 in the early London session before recovering and rallying to a daily high of 1.2324 and was near these highs at the time of writing.
The currency pair fell at the start of today’s session as investors remained worried about Brexit and the state of the UK economy. The selling pressure on the pound also increased following the release of the Markit/CIPS UK construction PMI, which came in at 43.3 missing expectations set at 45.0. However, Boris Johnson‘s announcement of a new proposal fueled the pair’s gains later in the day amid hope that a deal could be reached. The EU’s top Brexit negotiator Michel Barnier praised the progress made but emphasised that there were some problems with the proposals.
The cable fell slightly following the release of the weak US ADP employment change report but quickly recovered after the release of the downbeat ISM New York business conditions index for September. The Brexit news also helped the pair keep its gains.
The currency pair’s future performance is likely to be influenced by Brexit headlines and tomorrow’s multiple US macro releases.
The GBP/USD currency pair was trading at 1.2303 as at 18:31 GMT having rallied from a low of 1.2228. The GBP/JPY currency pair was trading at 131.83 having fallen from a high of 132.56.

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