Daily Economic Commentary: United Kingdom

Trading Discussion News and Economy
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After channeling higher over the past week, the pound finally tripped and fell when risk aversion came rolling back into the markets. The GBPUSD hit a high of 1.4771 last week, but couldn’t sustain its gains and ended the week almost 300 pips lower at 1.4474.

Clearly, it was news from other countries that triggered the return of risk aversion. Apparently, the culprit was the down move in the euro, as well as the disappointing US NFP report. This led to sell-offs in equity markets.

The only data released from the UK last Friday was the Halifax housing price index. The report indicated that housing prices fell by 0.4% last May, after initial forecasts were calling for a rise in prices of 0.3%. Moreover, our buddies at Halifax think that housing prices will remain flat for 2010. I guess this gives the Bank of England more reason to keep rates at low levels eh? After all, the housing market seems to be unstable. Low interest rates help stimulate housing demand as it makes paying mortgage payment easier.

Speaking of the BOE…

The BOE will be releasing its latest MPC statement later this week. Now, nobody really expects the central bank to hike interest rates. Given all the concerns in Europe, this shouldn’t come as a surprise. Watch out though, for any accompanying statements that could indicate just as to how long they’ll be keeping rates at current levels.

For today, look out for the BRC retail sales report coming out at 11:00 pm GMT. Retails sales by retailers who belong to the British Retail Consortium fell by 2.3% last April. Could we see a similar figure from May? If we see another drop in shopping by consumers, it may send the pound spiralling yet again.

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The pound turned out to be one of the stronger currencies in yesterday’s trading session. The Cable opened the week slightly lower at 1.4454, but some “good” news from UK’s new Prime Minister helped take it higher to 1.4468 by the end of the US trading session.

It seems like traders are happy on the overwhelming concern of the new Prime Minister David Cameron on UK’s ballooning public deficit. According to Cameron, his planned austerity measures will [B]clearly [/B]help UK grow in the next couple of years. Additionally, Cameron pointed out that these austerity measures will ease the fears of a sovereign debt default.

UK’s economic cupboard today is pretty light, with only the Nationwide consumer confidence index scheduled to come out at 11:01 pm GMT. The index is predicted to print a reading of 72 for the month of May, down from 74 reading seen in April. This means that consumers became less confident about their financial standing, which could lead to a decrease in spending. Weak spending usually translates to slow growth, which traders consider bearish for the pound.

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Is the UK on the path towards a fiscal crisis? It seems that traders are growing concerned over UK’s huge public deficit, dragging the cable to a low of 1.4347 during the US session.

Instead of downgrading UK’s debt, credit rating agency Fitch simply let the UK off with a warning. Phew! Still, Fitch remarked that the UK must take more aggressive steps to trim its bulging deficit, which already swelled to more than 11% of its GDP. On top of that, UK Chancellor George Osborne pointed out that the large deficit is a threat to their economy, causing the pound to lose its appeal.

The UK didn’t release any economic reports yesterday, which was probably why the pound was so sensitive to comments on the UK’s debt. Today, the trade balance release could provide a bit of support for the pound. The trade deficit is expected to narrow from 7.5 billion GBP to 7.0 billion GBP in April as the recent pound weakness spurred demand for UK exports. Watch out for the actual report due 8:30 am GMT.

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Why thank you Mr. Risk Appetite! Thanks to a shift in risk sentiment yesterday, the pound was able to post some decent gains versus the dollar. The GBPUSD closed over 100 pips higher at 1.4532, even testing the 1.4600 handle. Will this continue as we pass the midway point of the week?

The pound was able to gain despite the poor results of the trade balance report that was released yesterday. The data revealed that exports and imports fell by 0.6% and 0.4% respectively, as the volcanic eruption of Eyjafjoell (I don’t even know how to pronounce that!) disrupted trade flows. Overall, a net deficit of 7.3 billion GBP was reached during the month, which was slightly worse than the forecast of a 7.0 billion GBP figure.

It’ll be interesting to see whether exports rise in the coming months, especially since the pound is getting weaker. Remember, a cheaper currency helps may exports relatively more affordable to trade partners.

Looking at today’s [=&currency[]=AUD&currency[]=CAD&currency[]=CHF&currency[]=EUR&currency[]=GBP&currency[]=JPY&currency[]=NZD&currency[]=USD&importance[]=&importance[]=3&importance[]=2&importance[]=1&display=daily"]economic calendar](Forex Economic Calendar[), it looks like the Bank of England will be releasing its monetary policy statement at 11:00 am GMT. Now, nobody quite expects any change in interest rates or in the asset purchase facility.

Even though recent data has pointed to inflation rising to 3.7% (yikes!), BOE officials have repeatedly said that this will only be a temporary jump. Besides, the economy is still showing signs of weakness and with the British government looking to implement tougher austerity measures, it may be wise to keep quantitative easing measures in check. In any case, be on the lookout as any surprise comments made by BOE officials could send the pound flying all over the place.

If you want to know more about austerity measures, make sure you head on over to Forex Gump’s blog, as he recently talked about the new “austerity fad” that everyone in Europe seems to be following!

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Risk on! Thanks to the unexpected surge in China’s trade balance released early yesterday, the pound was able to mark its second day of wins over the dollar. It ended the US trading session above the 1.4700 handle, which was almost 170 pips higher from its opening price during the Asian session.

Aside from China’s stellar trade figures, the pound bulls also drew strength from the Bank of England’s interest rate decision. According to the bank, they decided to keep rates unchanged at 0.50% and their quantitative easing program at 200 billion GBP because economic data has been showing that recovery is already taking place. This gave the bulls some much needed fuel to carry on with their pound-buying ways.

For today, there are two important reports that will be released at 8:30 am GMT that need to be watched.

The first one is the manufacturing production report. The report is expected to show that production grew 0.6% in April, which is a much slower pace than the 2.3% increase seen the month before.

The second one comes in the form of a producer price index (PPI). The PPI, which measures the change in the price of goods and raw materials bought by manufacturers, is predicted to print a decline of 0.9% for May, opposite the 0.6% increase seen the month before.

Given yesterday’s run in risk appetite, we could see the pound skyrocket again and post a new set of monthly highs the dollar if the reports come in better-than-forecast.

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So much for a week-long rally! The pound was unable to sustain its winning streak when weak economic figures weighed it down last Friday. After topping at 1.4759, the cable edged lower and closed at 1.4528.

UK manufacturing production contracted by 0.4% in April, much to the surprise of many who were projecting a 0.6% uptick. I guess they were expecting that the depreciation of the pound at that time would boost exports and production. Compared to the 2.2% growth seen in March, the April downtick in production was a huge letdown. Apparently, the weaker than expected figure was a result of lower car production during the month. This suggests that UK is still struggling to stay on the path towards economic recovery.

Similarly, industrial production and producer output prices failed to meet expectations. Industrial production, which measures the output from mining and utilities, dipped by 0.4% in April after rising by 2.0% in the previous month. Producer output prices also fell short, posting a 0.3% increase, half of the estimated 0.6% rise. In contrast, producer input prices beat expectations, printing a 0.6% decline instead of the expected 0.9% drop. Still, both output and input prices of producers in May paled in comparison to their April figures.

This week looks like an exciting one since the UK has plenty of economic reports lined up. Still, it might be off to a slow start with only one economic report on today’s docket. Watch out for the release of the RICS house price balance due 11:01 pm GMT. The report could show that 16% of surveyors are reporting that house prices increased in their area. Also stay tuned for a speech by BOE monetary policy committee member Adam Posen’s speech at 9:00 pm GMT since he’s set to talk about the BOE’s inflation policy.

Get set for “Inflation Tuesday”, when the UK will release its CPI and core CPI, which are expecting 3.5% and 3.0% annualized upticks respectively. Also on Tuesday, the BOE policymakers will hold their quarterly inflation report hearings, when they assess the economic outlook of the UK. Keep your eyes and ears open for possible hints on the central bank’s future monetary policy moves!

On “Labor Wednesday”, the UK will release its claimant count change and unemployment rate, which is expected to hold its ground at 8.0%. Aside from those, the average earnings index will also be released. This report, which measures the change in price that businesses and the government pay for labor, is expected to post 4.4% growth in the past three months.

Watch out for the retail sales report and the CBI industrial order expectations on Thursday. Retail sales are expected to post a mere 0.1% uptick in May, which is less than the 0.3% growth seen last April. Meanwhile, CBI industrial orders expectations are slated to crawl from -18 up to -15 in June, reflecting a slight improvement in order volumes. However, since the index is still in the negative zone, decreasing volume is expected.

By Friday, the UK will release its preliminary mortgage approvals and public sector borrowing reports. Mortgage approvals are expected to be at 49,000 while public sector net borrowing is projected to climb from 10.0 billion GBP to 18.3 billion GBP in May. Uh oh, UK’s public deficit just keeps rising, doesn’t it? A worse than expected figure could revive those nasty debt concerns and push the pound even lower!

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Talk about kicking off things on the right foot! The pound started the week on a strong note, as it managed to make new highs versus the dollar. The GBPUSD rose to as high as 1.4810, before settling at 1.4745, marking a gain of 170 pips.

The pound rallied on some good news from our buddies over at the Office of Budget Responsibility sent over some good news. According to the OBR, the UK will be able to post a lower budget deficit over the next couple of years. They project that the debt to GDP ratio will fall to 10.5% in 2011, down from March’s projection of 11.1%. All in all, the deficit is expected to fall from 155 billion GBP in 2011 to 71 billion GBP by 2015.

This was good news, as the OBR is considered to be “unbiased” in their projections. This helped boost sentiment towards the pound, as it signaled that the British government’s plans to alleviate debt will be successful.

In other news, the RICS house price balance report printed a reading of 22%. This means that surveyors reporting an increase in housing prices outnumbered those who said prices fell by 22%. Could this be a sign of rising inflation?

Speaking of inflation… Today is “Inflation Tuesday!” Starting at 8:30 am GMT, inflation data will be released in the form of the consumer price index. The headline report is expected to show that consumer prices rose an annualized 3.5% last May, down from the 3.7% figure posted last month.

Let me remind you that the Bank of England’s target inflation rate is capped at 3.0%. If we see more signs that inflation is continuing to rise, it could lead to speculation that the BOE will choose to raise interest rates sooner than expected. Remember, raising interest rates is one way to help curb inflation. If we do see a figure greater than 3.5%, watch out for some big comments when the quarterly inflation report hearings come out at 9:00 am GMT.

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After lazing around a tight 70 pip range during the Asian trading session, the Cable burst with life once the US trading session rolled along. It ended the day at 1.4820, its highest level in more than a month.

As usual, the culprit for the Cable’s rally yesterday was the surge in risk appetite stemming from the US equity markets. The S&P 500 closed with a 2.35% gain. Similarly, the Dow Jones Industrial Average edged higher by 2.10%. Additionally, the Cable was buoyed by the speculation that the UK government will apply some emergency budget cuts to quickly reduce its ballooning public deficit.

Economic data was disappointing though. The consumer price index only printed a 3.4% increase, lower by 0.1% from forecast. The core version of the report, which excludes the prices of volatile items such as energy and food, like wise came worse-than-expected. Instead of showing a climb of 3.0%, it only showed a rise of 2.9%.

Looking at today’s economic calendar, we’ve got some employment data on deck at 8:30 pm GMT. UK’s unemployment rate is projected to remain at 8%. Meanwhile, the Claimant Count Change is predicted to show that the number of people that claimed jobless insurance in May fell by 23,200. If the actual reduction is much more than forecast, expect to see the Cable post some gains again.

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The pound had a tough time holding on to its gains even when the UK churned out strong employment figures. After lingering around the 1.4800 mark for almost an entire day, the cable rallied to a high of 1.4856 and closed at 1.4827.

UK’s employment report showed that the number of people who claimed unemployment benefits in May was down by 30,900. This was a larger decline compared to the projected 23,200 drop in claimants. This brought the unemployment rate down by a notch, from 8.0% to 7.9%. However, the average earnings index, which measures the change in price businesses pay for labor, fell short of expectations. The earnings index posted a 4.2% increase, which is less than the 4.4% forecast and the previously reported 4.3% rise. With the UK’s debt-trimming austerity plans on the horizon, much larger salary cuts could be in the cards. Lower wages could cause quite a damage on spending, production, and overall economic activity. Yipes, gotta watch out for that!

For the meantime, the upcoming retail sales release could show a 0.1% uptick for May. Even if the actual figure meets expectations, the May figure would be slightly less than the 0.3% retail sales growth seen in April, suggesting that consumer spending is starting to weaken. This could have a negative impact on the pound, especially if the actual figure fails to hit the mark. Look out for that at 8:30 am GMT today.

Later on, the CBI industrial orders expectations report will be published at 10:00 am GMT. This report could show that expectations for order volumes are a bit less downbeat this June. The index is slated to climb from -18 to -15, signaling that decreasing order volumes are expected.

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What a day for the pound! The GBPUSD looked headed for new lows, before the release of some good economic data caused the pound to soar back up to previous highs! The pair seems to be finding resistance just above the 1.4800. How long will it hold?

The pound dropped earlier in the day as Bank of England Governor Mervyn King downplayed fears that inflation will continue to rise. Recent data showed that the annualized inflation rate fell to 3.4% in May, down from 3.7% in April. Take note, the BOE’s target inflation rate is at 3.0%. One interesting thing that King said is that the BOE will be looking to start exit strategies by raising interest rates as opposed to selling more bonds. The only question is, when will they actually start doing this?!

Pessimism towards the pound died down once retail sales data hit the airwaves. Sales rose by 0.6% in May, up from the projected 0.1% increase. Apparently, the rise was caused by a rise in TV buying by the British public as they all want to watch Rooney and his pals play at the World Cup. I’m not even kidding – TV sales was really the main driver!

I wonder though, if this will continue into next month. The England team managed just a draw with the US, which was very disappointing since England was considered one of the favorites entering the tournament. If this is a sign of things to come, then the Brits may be eliminated sooner than expected!

In other news, the CBI industrial orders expectations came in slightly worse than expected, which probably capped further gains by the pound. The report had a reading of -23, lower than the projected -18 figure. This indicates that companies are expecting decreasing orders in the coming months.

Looking at today’s economic calendar, we’ve got public sector net borrowing figures at 8:30 am GMT. The report is expected to show an deficit of 18.2 billion GBP for the month of May. Watch out though, if the figures indicate that the British government cannot keep their expenses in check. This would raise concerns that the UK will not be able to fix its deficit problems, which may send the pound lower.

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With just a couple of low-key reports on its economic agenda last Friday, the Cable found itself mostly drifting within a tight range last Friday. It closed the US trading session at 1.4821, barely changed from its Asian session opening price of 1.4834.

This week could prove different as UK’s economic calendar presents a few important economic reports that could rock the Cable’s boat.

The boat-gyrations will begin on Tuesday, when UK’s government releases its budget report for this year at 11:30 am GMT. UK’s ballooning public deficit has been a hot topic these past few weeks, which could mean that the upcoming report could be garner a lot of attention from traders.

Then, on Wednesday, the Bank of England’s Monetary Policy Committee (MPC) will publish its meeting minutes at 8:30 am GMT. The expectation is that all nine of the voting members of the MPC believed that interest rates should be kept unchanged at 0.50%. This means that traders will probably watch the accompanying report that details the MPC’s assessment on UK’s economy instead.

On the technical side, keep a close eye on last week’s high at 1.4887… If that resistance level breaks, the Cable could easily rally towards the 1.5000 psychological barrier! Stay sharp folks!

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The cable was off to a strong start as it zoomed from an opening price of 1.4840 to a high of 1.4937. However, the price action moved downhill from there as traders turned their attention to the upcoming annual budget release from the UK.

According to Chancellor of the Exchequer George Osborne, the government will most likely take aggressive steps to trim down the UK’s swelling sovereign debt. Although the details are still vague, austerity plans could involve 80% in spending cuts and 20% in tax hikes. Since the UK’s economic footing is not quite stable yet, fears of a double-dip recession started to arise.

The release of the yearly budget report today 11:30 am GMT could shed more light on the state of the UK’s debt and the government’s plans to scale it down. This is expected to include details on the emergency budget that the new coalition government would present to the UK parliament. Stay on your toes upon the release of this report since it could set off some fireworks on the pound pairs’ charts.

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After bursting to as low as 1.4688 early in the European session, pound bulls came back in force, pushing the GBPUSD all the way back up to the 1.4850 level. What the heck happened?

With risk aversion sweeping the markets away, the pound dropped early in the day, as traders were probably nervous over the upcoming annual budget release. However, all those losses were erased once Chancellor of the Echequer (basically, just a fancy title for the Minister of Finance) George Orwell… I mean George Osborne… stepped up to the stage.

In his statement, Osborne said that part of the government’s austerity plans will be to cut corporation taxes over the next four years. Apparently, Osborne wants the UK to have the most competitive corporate tax regime. With the government having to cut spending in order to reduce their debt, economic growth will have to be boosted by the private sector. The markets seemed to take these comments positively, as the pound rose up quickly before the start of the US session.

The only question is whether these gains can be sustained. There is a lot of weakness and instability in the markets right now, that traders jump at any and all news that is released. Just look at what happened this past week – everyone’s already forgotten about the China unpegging the Yuan!

We could be in for more wild moves today, as some hard hitting data are scheduled for release. At 8:30 am GMT, the minutes of the latest MPC meeting are due. The notes will reveal what was discussed and what potential moves the MPC could take as we enter the 2nd half of the year.

Watch out also for the BBA mortgage approvals and CBI realized sales data coming out at 8:30 am and 10:00 am GMT respectively. About 36,000 new mortgages are expected to have been approved last month, up from the previous month’s figure of 35,729. This would indicate that home buyers are having easier access to credit.

Meanwhile, the CBI realized sales index is projected to post a reading of -17. While this would indicate falling sales volume, it would represent a slight improvement from May’s score of -18.

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Ho, ho, ho, the pound staged a major rally and hit a brand-new monthly high against the dollar yesterday. Hmm, what caused this super move?

Well, much to everyone’s surprise, the meeting minutes of the Monetary Policy Committee (MPC) published yesterday revealed that Andrew Sentence, one of its members, voted to raise interest rates by 25 basis points to 0.75%. According to him, inflation has risen way above the bank’s 2% target and could pose a problem in the future if it is not contained. The minutes helped boost the pound across the board as it was the very first appeal for a rate hike in nearly two whole years.

There was also another report that was released that provided support for the pound. Instead of printing -17, the CBI distributives survey beat expectations and showed a reading of -5 for this month. Although this means that sales volumes by retailers and wholesalers were still decreasing, it was a significant improvement from May’s figure of -18.

UK’s economic calendar for today presents nothing of interest so keep an eye out for data coming out of the US to determine where the pound is headed.

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Argh! After several attempts, the cable was unable to keep its head above the psychological 1.5000 mark for long. Despite the positive reaction to the UK’s proposed austerity measures earlier this week, many traders still seemed to doubt whether the UK could overcome its fiscal challenges without compromising economic growth.

The only economic release from UK yesterday was the BOE Financial Stability report, which revealed that their banks could stay resilient amidst their deficit problems and the ongoing debt crisis in the euro zone. Still, their banks face several risks from strained household finances. Hmm, this ain’t really my area of expertise but I guess it’s safe to say that uncertainty in the UK’s financial sector could pose threats to their economy. I’d keep an eye out for any fiscal setbacks because these could be bearish for the pound!

No economic figures are due from the UK today so keep an eye out for other reports that could have an impact on the cable’s movement. The US is set to release its final GDP reading for the first quarter and the revised consumer sentiment index for June. Unless these reports come out with mind-blowingly unexpected results, price action could be relatively calm in the absence of top-tier reports on deck.

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It seems that traders have reacted positively to all the new austerity measures that the UK government has in place, as the pound was able to post some decent gains in last week’s trading. The GBPUSD rose over 200 pips, and is now trading above the 1.5050 handle. Can GBP bulls sustain their momentum this week?

No reports were released last Friday from the UK, so it seems that it was sentiment from the government’s austerity measures that helped propel the pound to new highs. Remember, a few months back, the pound was being sold off like a bootleg Louis Vuitton bags along Downing Street whenever bad news concerning its debt problems surfaced. Now that there are plans in place to reduce the deficit, the markets have reacted positively as traders see this as a step in the right direction.

No news today, but keep an eye out for the G-20 meetings that are taking place. One of the major topics that will be discussed will be financial regulation policies. Also, it’ll be interesting to see whether the UK government gets commended for the steps they are taking to help cut into the country’s enormous debt. In any case, watch out for any comments made by financial leaders, as it could cause some big moves in the markets.

Make sure to circle 8:30 am GMT on Wednesday, as GDP data will be released. The final GDP report is expected to print growth of 0.3% last quarter, which would be the same as initial reports. If this figure comes in much higher than expected, it might just spark another rally in GBP pairs. Remember, at the recent MPC meeting, there was one MPC member who actually voted in favor of raising interest rates. If there are more signs that the economy is indeed recovering, it would give more reason to raise rates.

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Despite the absence of economic data from UK, the pound was able to gather enough strength to rally across the board yesterday. The pound, which posted significant gains versus the dollar, the euro, and the yen, turned out to be the best-performing currency amongst the major currencies.

It looks like Prime Minister David Cameron was right in saying that the government’s austerity budget would help return confidence back into UK’s economy… For the meantime, this seems to be the case, but what will happen once the austerity measures come into full effect? Government spending makes up a significant chunk of UK’s GDP, which means the UK’s austerity measures could negatively impact growth relative to other major economies. Once that happens, we could see the pound resume its decline…

Looking at UK’s economic calendar, I only see Bank of England’s report on consumer credit as potential event risk. Set to publish at 8:30 am GMT, the report is expected to show that new credit issued to consumers rose 100 million GBP in May. Increasing credit levels are usually considered good for the economy because it means that lenders are confident enough about the financial standing of consumers to issue out loans.

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Avast! Despite the strong run of risk aversion yesterday, the Pound tried to hold on to its pieces-of-eight. Cable was able to keep its head above the 1.5000 mark while Guppy wasn’t so lucky as it keelhauled to a low of 132.83.

The Pound got a bit of support from comments from some BOE officials, who said that the central bank is willing to tighten their monetary policy if inflationary pressures persist.

Data from the UK was mixed as a couple of economic figures beat expectations while one report missed the mark. Net lending to individuals, which is an indirect measure of consumer confidence and spending, rose from 0.9 billion GBP to 1.5 billion GBP in May. However, the GfK consumer confidence report showed that sentiment took a slight hit this June as it sank from -18 to -19, just a notch higher than the consensus of -20.

Meanwhile, the mortgage approvals report revealed that British banks granted fewer home loans in May. Lenders approved only approximately 50,000 loans during the month, down from the 51,000 mortgage approvals in April. This signals that demand for mortgages could be dwindling because the UK has several budget cuts on the horizon. How much more damage to the economy could these belt-tightening measures cause once they are actually implemented? Arr, shiver me timbers!

Up ahead, another housing market indicator is on deck. Keep your eyes open at 6:00 pm GMT for the release of the Nationwide HPI, which is slated to post a 0.3% increase in house prices for June. This forecast is already less than the 0.5% rise seen in the previous month so a weaker than expected figure could force Cable to surrender its booty and Guppy to sink even lower.

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After days of bucking the trend, Cable finally followed the rest of the markets and dropped thanks to the return of risk aversion. After opening at 1.5075, the pair closed over 130 pips lower at 1.4940. Could this be the beginning of a new down move for GBPUSD?

Cable bulls were sent back to the farm yesterday, after comments made by Bank of England MPC member Adam Posen. Posen had a pretty dovish stance, saying that the economy is exposed to weak recovery in Europe, as well as adverse effects from the austerity measures that government wants to implement. Hmmm… didn’t my buddy Forex Gump post something about this on his blog last week?

The release of the Nationwide housing price index didn’t help matters either. The report showed that housing prices rose by just 0.1% last month, slightly worse than projections of a 0.3% increase. This indicates that there is still some weakness in the UK labor market, and that perhaps the BOE should probably keep interest rates at low levels. Low rates allows consumers cheaper access to credit, which would stimulate the housing market.

Speaking of credit conditions… the BOE credit surveys will be released today at 8:30 am GMT. The report is released every quarter, measuring the state of uh… credit conditions in the UK. This could give us a better idea of whether consumers are having easier access to credit or not.

Also, keep an eye out for the manufacturing PMI report, also due at 8:30 am GMT. The index is projected to print a reading of 57.6, which is slightly lower than the previous month’s 58.0. If this reports come in worse than expected, we may just see another round of pound selling.

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Thanks to weak economic reports from the US, the bulls were able to buy up Cable like ice cream on a hot summer day. From an intraday low of 1.4874, Cable flew more than 300 pips to close the US trading session at 1.5182.

Data that came out of the UK fell well in line with expectations. June’s manufacturing purchasing managers’ index (PMI), which measures whether the manufacturing industry is growing or not, printed a figure of 57.5. Because the figure is greater than the baseline reading of 50.0, it means that the industry is still expanding, albeit at a slower pace than the month before.

Up ahead, at 8:30 am GMT, the construction sector’s version of the PMI will be released. Similar to the manufacturing PMI, the report is designed to see how well (or poorly) the construction sector is doing. It is expected to print 58.5 for June, which is the same as the reading seen the month prior. If the actual figure comes in above consensus, we might see Cable bulls take charge again.