THE TAKEAWAY: UK PMI Manufacturing rises to 49.4 in April, a six month high -> BoE predicts muted growth in H1 -> Pound fails to maintain gains
The UK Purchasing Managers’ Index for construction rose to a six month high in April, but failed to send the Pound significantly higher. The PMI for construction was reported at 49.4, beating expectations for 48.0 and higher than the 47.2 index result in March. A PMI below 50.0 indicates a contraction in sector activity, according to Markit.
The UK economy expanded by 0.3% in Q1 on an improvement in the services sector. The BoE predicted muted growth in the first half of 2013, and Governor King said a recovery is in sight in the longer term. Signs of increased economic growth are Pound positive.
However, the Pound was unable to sustain gains following the beat of expectations in the construction PMI release. GBP/USD is trading higher for the seventh consecutive session, but the pair may see resistance around 1.5595, by the cross of a 50% Fibonacci retracement and an upward trading channel.
Earlier today, the Euro-zone PMI for manufacturing was revised slightly higher in a final estimate, but still sat a four month low. The Swiss manufacturing sector returned to expansion in April, according to a PMI released earlier today. Both the Euro and the Swiss Franc rose slightly on respective better than expected index releases.
Newly appointed Italy Prime Minister Letta said today that Italy will maintain its deficit commitments. The comments may further calm worries that a new Italian PM may undo the economic reforms put in place by former PM Monti. Letta and EU’s Barroso were briefing the press in Brussels.
Later today, the ECB will announce its rate decision following its May meeting, and most Bloomberg surveyed analysts are expecting a rate cut. Read about the possible impact of the rate decision on Forex markets here.
GBPUSDDaily: May 02, 2013
Chart created by Benjamin Spier using Marketscope 2.0
-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to email@example.com .