LONDON: The pound rose on Tuesday as risk appetite rebounded and a survey showing decent growth in Britain’s construction industry gave sterling some respite from recent gloom about the progress of Brexit talks.
Chinese central bank comments on keeping the yuan stable, as well as broader moves higher for assets such as stocks, boosted currencies across the board including sterling.
The British currency rose as much as 0.4 percent versus the dollar to as high as $1.3207, away from 2018 lows hit last week of $1.3050. It later gave up some of those gains to trade at $1.3180 at 1510 GMT.
The Construction Purchasing Managers’ Index (PMI) picked up to 53.1 in June from May’s 52.5, better than forecast and the fastest rate of growth in seven months. It was the third month in a row that the sector grew after contracting in March.
Versus the euro sterling strengthened 0.2 percent to 88.40 pence.
Sterling has struggled in recent weeks as worries about whether Britain can secure itself a deal with the European Union before it leaves the bloc next March weigh on the currency.
On Monday it fell despite relatively robust manufacturing survey data as investors worried about a looming Brexit cabinet meeting later this week.
British Prime Minister Theresa May has called on her Conservative Party to “stand together”, but with the clock ticking before a March departure date and divisions rife within her cabinet over what to seek from the EU in negotiations, forging a unified approach is far from easy.
“We’re still wary that euro/sterling is on the verge of an upside break-out given its exit from a period of very low volatility. PM May looks set to face down the Brexiteers later this week, but may be no closer to a Brexit deal,” ING analysts said in a note.
Adam Cole, currency strategist at RBC, said the construction PMI was the least interesting of the three PMI releases this week, but the numbers will help build up the survey-based estimate of second quarter GDP, which will help determine if the Bank of England raises interest rates in August or waits.
Source: Brecorder
