Yesterday’s strong Purchasing Manager Index survey of the construction sector for the UK economy brought more good news for Sterling.The November gauge of activity levels in Britain’s building sector, which many analysts are looking to in order to return UK PLC to economic prosperity, printed at 62.6 up from October’s showing of 59.4 and well ahead of the consensus opinion of economists which was that the figure would show at 59.0.
The news allowed the Pound to maintain levels against the euro and dollar ahead of the services PMI due at 9.30am (GMT) today. This is expected to show a small decline from last month and may put a temporary halt to Sterling’s seemingly inexorable recent rise.
Not for the first time in recent weeks, the data coming out of mainland Europe has been encouraging, with the publication of numbers which revealed that the level of factory orders has risen for the fifth month on the trot in the Eurozone. However, the euro remains stuck in a tight range ahead of the ECB meeting on Thursday as the market waits to see if the bank will follow last month’s cut in deposit rate with another more radical change in policy.
The ECB’s options are still wide ranging – they still have room to cut rates, they may an nounce another LTRO and the nuclear option would be to announce negative deposit rates. They will probably do nothing but wait and see, although the uncertainty over their next move is keeping the single currency on a tight lease ahead of Thursday’s meeting.
The dollar retreated against the yen and a basket of currencies in Asia on Wednesday as investors locked in profits ahead of major risk events including US jobs data due later in the week.
The Australian dollar, meanwhile, tumbled to a three-month low after Australia’s July-September gross domestic product growth failed to meet market expectations. The Reserve Bank of Australia kept its cash rate steady at a record low of 2.5 percent on Tuesday, and reiterated that the local currency remained “uncomfortably high”.
The Aussie skidded 1 percent on the day on Wednesday to $0.9045, its lowest since early September, after data showed the economy grew 0.6 per cent in the third quarter, falling short of forecasts for 0.8 per cent growth .