Sterling Weakest After UK Construction PMI Sinks to Record Low

The Great Britain pound was the weakest currency on the Forex market during Wednesday’s trading. Initially, the euro was the second weakest but currently, the Canadian dollar replaced it, falling versus the shared European currency and trading about flat against the sterling. The drop of the UK construction index to the record low was among possible reasons for the slump of Britain’s currency.
The headline seasonally adjusted IHS Markit/CIPS UK Construction Total Activity Index fell from 39.3 in March to 8.2 in April, falling to the lowest level in the history of the survey. Analysts were expecting a better reading of 21.5. The report commented on the result:

April data indicated by far the fastest decline in UK construction output since the survey began 23 years ago. The vast majority of survey respondents (86%) reported a reduction in business activity since March, reflecting widespread site closures and shutdowns across the supply chain in response to the public health emergency.

Adding to the woes of the sterling is uncertainty about the Brexit talks between the United Kingdom and the European Union and whether a trade deal can be reached by the deadline at the end of the year. The conflict between the United States and China regarding the handling of the pandemic and information about it by the Asian nation hurts the market sentiment, and that also weighs on Britain’s currency.
Now, traders wait for tomorrow’s monetary policy decision of the Bank of England. While no changes to the current monetary policy are expected, market participants will watch for the wording of the central bank’s statement.
GBP/USD fell from 1.2432 to 1.2384 as of 13:27 GMT today. GBP/JPY dropped from 132.36 to 131.47. GBP/CAD was about flat at 1.7466 after falling to the daily low of 1.7372.

If you have any questions, comments, or opinions regarding the Great Britain Pound, feel free to post them using the commentary form below.

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