The British pound has finally found some support today on the back of a round of positive local data that brings to a halt the dramatic slide the currency has suffered over the past 2 weeks but a few analysts remain wary and predict that the pound will resume its downtrend.
The purchasing managers index for the construction industry (PMI) hit the market earlier today at 52.5 for the month of April, above expectations for a figure of 50.5 and well up from the previous month’s number of 50.5.
Some claim the news was to be expected because of severe weather experienced over winter cause an unusual amount of damage to homes and buildings which accounted for much of the new construction projects.
“A rebound in construction activity was pretty well inevitable after snowfall resulted in severe disruptions on site during March. House building led the way, with growth in April among the strongest seen over the past two-and-a-half years," said Tim Moore, associate director at IHS Markit.
A rebound in PMI figures will not offset the other disappointing data released to the market recently and will not be enough to sway the Bank of England’s anticipated decision to keep rates on hold When they announce their decision next week.
Brexit will once again be at the forefront of the pounds fortunes today as British prime Minister Theresa May meets with her cabinet to come up with a solution on the border issue between Northern Ireland and Ireland and with options running out, the chances of the UK remaining in the customs union are growing by the day.
If the talks do indeed head that way, Mrs May could face a revolt by members of her own cabinet which will lead to speculation of a hard Brexit which will surely further damage the pound.
"The pound has been under relentless downward pressure. The upturn in Brexit uncertainty surrounding the Customs Union debate is not helping” says Derek Halpenny, European head of global markets research at MUFG
“Today will be an important day in this debate with PM May holding a cabinet meeting to try and reach a consensus on an approach to border controls," he added.