Sterling Falters Following Soft Construction PMI
The GBPUSD was unable to break resistance levels following a weaker than expected construction PMI. The currency pair attempted to break resistance levels near the 10-day moving average but was rejected following stronger than expected jobs data released during the US morning.
UK Markit construction PMI much worse than expected at 57.8 in March, down from February’s 60.1 and well below the median forecast for 59.5. The decline in March was largely reflective of a slowdown in civil engineering activity growth, which the survey found may be related to uncertainty ahead of the May 7 general election. Job creation also remained below 2014 levels. However, Markit points out that at 57.8 this still signals a robust level of activity while business confidence rose to a nine-year high.
Jobs data in the US has been mixed over the past two trading sessions. On Wednesday ISM and ADP released employment data that was softer than expected. This was offset by Thursday strong Challenger report and BLS claims data. The U.S. Challenger reported announced layoffs fell 14k down 27.0% in March to 36.6k. Announced layoffs have declined in 4 of the last 5 months. However, compared to last year, announced job cuts are up 6.4% year over year after rising 20.9% year over year in February. The industrial goods sector experienced the heaviest reductions at 5.9k, followed by electronics at 1.6k, while announced layoffs in energy declined 15.1k last month after falling 3.9k in February, still recovering from the 17.4k announced layoffs in January.
The BLS data showed that U.S. initial jobless claims fell 20k to 268k in the week ended March 28, from a revised 288k previously. That brought the 4-week moving average to 285.5k from 300.25k. Continuing claims fell 88k to 2,325k in the week ended March 21 versus a revised 2,413k in the week prior (was 2,416k). The claims were the lowest since the week ended January 24.
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