FOREX Watch: GBP/USD rises more than 1 percent
The British pound found strong buy-in Friday following the release of upbeat construction PMI. UK construction activity grew at its fastest pace in three years, sending another positive signal to investors that economic recovery is deepening in the UK. The Market PMI figure of 57.0 blew away the previous month’s reading of 51.0, and bypassed expectations for a 51.6 reading in July, according to a survey of Bloomberg economists. A separate report on the housing sector showed UK house price inflation rose 0.8 percent month-on-month, and at an annualized rate of 3.9 percent for the year-ended in July.
The GBPUSD skyrocketed more than 1 percent on the data, breaching the 1.53 line before consolidating at 1.5283 in the New York session. The GBPUSD advanced 170 pips following a lackluster week that saw the pair lose more than 1 percent ahead of the Friday releases. As the pair prepares to test 1.53, a bypass of 1.5318 would open the door to 1.5353 (July 30 high), and finally 1.5416 (July 26 high).
The pound’s gains on the US dollar escalated following the release of official employment figures. Job growth slowed in July, as the US economy added 162,000 non-farm payrolls, compared to 188,000 the previous month. Job growth failed to meet the expectations of the Bloomberg consensus, which called for the creation of 184,000 jobs last month. The unemployment rate did however decline to 7.4 percent, edging closer to the Federal Reserve’s 6.5 percent target.
In other trading, the pound gained more than half a percent against the euro, ending its week-long rally. The EURGBP clung on to 0.8700 before falling below the handle. The pair hit a session low of 0.8683 in Europe before consolidating at 0.8692 in the New York session.
Earlier in the week the euro lost ground on dovish remarks from ECB President Mario Draghi. Like the Bank of England, the European Central Bank opted to leave interest rates unchanged. Draghi’s low rate guidance promised investors monetary policy would remain accommodative for the foreseeable future.
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