As if we needed additional evidence that the UK may be headed for recession, UK construction PMI hit yet another record low of 36.7 in July. Looking at a breakdown of the report, business activity and new orders appear to be grinding to a halt as the UK grapples with a housing sector collapse rivaling that of the US.
On Tuesday, PMI for the services sector will hit the wires and is anticipated to hold below 50 and signal contraction for the third consecutive month. On the other hand, industrial production for the month of June is forecasted to rise a mild 0.1 percent, but given the weak results of the CBI Industrial Trends survey for the same period, there is potential for output to contract once again. My fundamental bias for the British pound on Tuesday: bearish. However, like the euro’s event risk, these UK releases may only have a brief impact on Cable.