Sterling Steadies

The British pound regained some recent losses against the euro and dollar after today’s better-than-expected UK construction PMI, which was surprisingly better following a recent string of disappointing UK economic data.

The UK construction sector activity rebounded sharply in April, with the final Markit Purchasing Managers’ Index (PMI) jumping to 52.5 points as compared to 47.0 in March and a reading of 50.5 was expected.

Later, today we have the Eurozone GDP estimate. The consensus forecast is for a decline in the first three months of this year, with analysts predicting GDP growth of 2.5% year/year, down from 2.7% in the final quarter of last year.

Such a slowdown would follow a period of strong Euro-Zone growth. In addition, the Euro has suffered from the lack of hawkish commentary from the European Central Bank at the last meeting of its policy-setting Governing Council and from mixed data, with steadier purchasing managers’ indexes offset by weakness in numbers such as German retail sales, which fell for a fourth straight month in March.

Therefore, euro weakness would not be a surprise.

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