On Tuesday, the British pound dropped considerably, and GBP/USD traded at about 1.2713, down 0.66% for the day in the North American session. GBP/USD earlier dropped to 1.2672, the lowest level since July 2.
July’s UK Construction PMI index was impressive and rose to 55.3, the highest level in 26 months. This was up from June’s 52.2 and much higher than the market estimate of 52.7. The construction sector has now extended its expansion streak to five months.
In July, the manufacturing and services sectors also accelerated and are expanding, indicating stronger activity in the economy. Last week, the Bank of England cut interest rates from 5.25% to 5%, the first cut since March 2020.
This should accelerate economic activity further and will provide homeowners with some relief as high mortgage payments have hammered them.
Global stock markets were jittery after the meltdown on Monday. The sharp downturn was caused by a soft US employment report, as the unemployment rate rose to 4.3% and nonfarm payrolls dropped to 114K.
The soft numbers have fueled fears that the US economy, the largest in the world, may be on the verge of recession. The markets panicked and have been calling for the Fed to deliver an unscheduled rate hike. The Fed will meet again on September 18.
