Sterling has moved higher so far this morning after the Construction PMI data for July came in stronger than expected. A print of 45.9 was well above the 43.8 forecast, and the pound rallied to its highest level of the week on the back of the announcement. Before Brexiters celebrate this as a victory it should be pointed out that the reading was in fact the worst since 2009, and the pop in the pound seems more likely due to overly-pessimistic expectations rather than the result of a strong economic data point. With 50 marking the line in the sand between contraction and expansion, it is pretty clear to see the weakness in this sector.
FTSE backs away from 2016 peak
The FTSE 100 is trading lower by approximately 35 points this morning, with the majority of the declines coming prior to the aforementioned economic release. The biggest event of the week for UK stocks is Thursday’s Bank of England meeting, with expectations for some easing of monetary policy on the rise once more after last month’s disappointment. Over 90% of respondents to a Bloomberg survey believe the central bank will take the unprecedented step of cutting the base rate to 0.25% in a move that will apply more pressure to the struggling banking sector. Largely due to this, bank stocks are moving lower again this morning with RBS (LON:RBS), Barclays (LON:BARC) and Lloyds (LON:LLOY) all residing near the bottom of the index.
Gold stocks continue to rise
At the other end of the benchmark Fresnillo (LON:FRES) and Randgold Resources (LON:RRS) are both enjoying another sizeable day of gains as the price of Gold bullion has broken higher to trade at its highest level in over three weeks. The rise in the precious metal is in part due to dollar weakness seen of late, but the second major macroeconomic event of the week - Friday’s US jobs report - could change this quickly. After a shockingly poor reading at the start of June, the headline figure rebounded strongly last month with 287k jobs being added. This print was the second best of 2016 so far, and a number in this region again come Friday would increase calls for the Fed to raise rates, which in turn could halt the recent rally in Gold in its tracks.