UK Construction PMI Plunges to Five-Month Lows 

 

In October, Britain’s construction lost momentum but suffered least  in compared to the other economy’s that are hit by the coronavirus pandemic. 

The IHS Markit/CIPS Purchasing Manager’s Index for the construction sector dropped to 53.1 in October from September’s 56.8, a bigger drop than the decline to 55.0. 

However, unlike figures released on Wednesday for the much larger services sector, the gauge remained well above the 50 level which separates growth from contraction. 

“The construction sector was a bright spot in an otherwise gloomy month for the UK economy during October,” IHS Markit economist Tim Moore said. 

Since the end of lockdown, House building contributed much to the growth of the economy and helped by a temporary cut in property taxes which has seen lenders approve the highest number of mortgages since 2007. 

New orders in the sector, which makes up about 6% of Britain’s economy, rose by the most in five years. 

Despite the four-week lockdown that just started on Thursday, the construction industry is exempted and any construction activities are resumed during this four-week period. 

“Survey respondents widely commented on renewed economic uncertainty and concerns about the sustainability of the recovery as pent-up demand begins to wane,” Moore said. 

Steep declines in activity while growth in commercial activity was halted as reported by the civil engineering sector. 

Technical Outlook 

 

In the daily charts of GBP/USD, the pair edged lower early morning Friday on Sydney session. 

The sterling edged higher against the dollar on Thursday as the Bank of England handed down its monetary policy. On Friday, the sterling gave back some of its gains but the dollar seems to steady once again in the Tokyo session.  

The pair may breakout the resistance level at 1.31966 this weekend as the dollar weakens due to the uncertainty of the U.S. Presidential election and negative U.S. market outlook. Once the price breaks out from this resistance level, we may expect a strong upward pressure from the sterling next week. 

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