The British pound hit another 26 year high this morning on the back of a stronger than expected construction sector PMI report. In contrast to the US, the housing market in the UK has been extremely healthy. In fact the 60.1 print in the PMI index is the strongest in over 3 years.
[B]This indicates that not only are house prices accelerating, but the demand for residential buildings is increasing as well. Manufacturers do think that they are reaching a top however since the future business activity index dropped to the lowest level in a year. The value of the British pound should remain high going into Thursday?s interest rate decision. Before that we do have service sector PMI which is expected to improve slightly in the month of June. The market continues to be unfazed by the terrorist threats in London which is a testament to the currency?s resilience.