British pound slips to one-month low

The British pound has posted considerably on Tuesday. GBP/USD is trading at 1.2713 in the North American session, down 0.66% on the day. Earlier, GBP/USD fell to 1.2672, its lowest level since July 2.

UK Construction PMI shines

The UK Construction PMI index impressed in July, rising to 55.3, its highest level in 26 months. This was up from 52.2 in June and blew past the market estimate of 52.7. The construction sector has extended its streak of expansion to five months.

The services and manufacturing sectors also accelerated in July and are in expansion territory, indicating stronger economic activity. The Bank of England lowered interest rates last week for the first time since March 2020, from 5.25% to 5%. This move should further accelerate economic activity and will provide relief to homeowners who have been battered by high mortgage payments.

Global stock markets are jittery after Monday’s meltdown. The sharp downturn was triggered by the soft US employment report, as nonfarm payrolls fell to a paltry 114 thousand and the unemployment rate rose to 4.3%.

The weak numbers have raised fears that the US economy, the biggest in the world could be on the verge of recession. The markets reacted in a panic and there have been calls for the Federal Reserve to deliver an emergency unscheduled rate hike. The next Fed meeting is on September 18 and the markets have priced in a half-point cut in response to the market turmoil.

GBP/USD Technical

• GBP/USD is testing support at 1.2719. Below, there is support at 1.2659
• 1.2769 and 1.2829 are the next resistance lines

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