UK construction PMI overview The UK construction PMI for May is due for release today at 0830GMT, with the figure expected to come in a tad weaker at 52.7, when compared to April’s positive surprise of 53.1 points. Deviation impact on GBP/USD Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 10 and 45 pips in deviations up to 2 to -2, although in some cases, if notable enough, a deviation can fuel movements of up to 70 pips.
How could affect GBP/USD? A positive surprise in the construction sector activity report would provide much-needed impetus to the GBP bulls, which could lift the rate back towards 1.29 handle. On the other hand, a bigger-than expected drop in the PMI reading could knock-off the GBP/USD pair to test 1.2800 levels. An upside surprise in the construction sector PMI cannot be ruled out, given yesterday’s upbeat manufacturing PMI report, as the construction PMI has widely shown the similar behaviour as the manufacturing and services PMIs, analysts Societe Generale remarked in a research note. However, limited reaction is expected on the data, as the main risk event for markets today remains the US non-farm payrolls data.
Key notes GBP/USD Forecast: volatile within a broader trading range as we approach pivotal UK election Haresh Menghani, Analyst at FXStreet notes, “today's release of UK construction PMI is unlikely to be a game changer, with political headlines being a key driver of investors' sentiment surrounding the major.” About UK construction PMI The PMI Construction released by the Chartered Institute of Purchasing & Supply and Markit Economics shows business conditions in the UK construction sector. It is worth noting that the construction sector does not influence, either positively or negatively, the GDP as much as the Manufacturing sector does A result that values above 50 signals appreciates (or is bullish for) the GBP, whereas a result that values below 50 is seen as negative (or bearish).
Source - FXStreet