The Sterling pound declined today as markets remained cautious amid Brexit concerns as EU leaders continue to reject the UK’s alternative Brexit Plan B. The pound was dealt a further blow after the UK construction PMI missed expectations indicating that the industry grew much slower than expected.
The GBP/USD currency pair today dropped from a daily high of 1.3095 to a low of 1.3043 in the early European session following the weak PMI print.
The currency pair’s initial decline was largely driven by investor fears of a hard Brexit given the lack of progress on the Brexit deal just 53 days to the actual exit. The fact that EU leaders led by Donald Tusk the European Commission President are standing their ground on the Irish backstop plan makes the situation very unpredictable. Furthermore, Theresa May is also having difficulties convincing enough MPs to back her plan, which is the compromise Brexit deal that the EU has rejected. There is little hope among investors and businesses that the current Brexit stalemate will be broken, which has contributed to the cable’s decline.
The release of the Markit/CIPS UK construction PMI for January drove the pair lower as the print came in at 50.6 missing consensus estimates set at 52.4. The weak Markit/CIPS construction data was similar to other recent UK macro releases that have missed expectations.
The cable’s short-term performance is likely to be affected by Brexit headlines and the release of the US factory orders later today.
The GBP/USD currency pair was trading at 1.3062 as at 12:20 GMT having dropped from a high of 1.3095. The GBP/JPY currency pair was trading at 143.49 having fallen from a high of 143.89.
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