Sterling slips after survey data shows house building slump
Reuters
Published Jun 06, 2023 12:40
Updated Jun 06, 2023 12:52
By Harry Robertson
LONDON (Reuters) - The pound slipped on Tuesday as data showed that British house building wilted in May and the dollar found a footing.
Sterling was last down 0.18% at $1.241. The euro was flat against the pound at 86.18 pence.
The survey data showed house building in Britain fell at its fastest pace since May 2020 last month as construction companies struggled with rising interest rates.
The headline purchasing managers' index (PMI) survey score for the construction sector came in at 51.6 in May, above the 50 mark which signals growth and up from 51.1 in April.
Yet the headline concealed divergence within the construction sector, with commercial and civil engineering activity rising but house building suffering.
Chris Turner, head of markets at ING, said in a research note that Britain faced a "mortgage time bomb", with more than 600,000 mortgage holders due to refinance at higher rates in the next six months.
Turner said this could lead to the Bank of England (BoE) raising interest rates by less than markets expect. Traders currently envisage rates rising to around 5.4% later this year, from 4.5% currently.
The pound rose to a one-year high of $1.268 in mid-May as inflationary pressures remained strong - making more BoE rate hikes likely - and the outlook for the British economy has brightened somewhat.
It has since slipped as the dollar has found favour among investors due in part to fears about the now-resolved U.S. debt ceiling standoff and in part because of strong U.S. labour market data.
The dollar index - which measures the greenback against six peers - was up 0.15% at 104.15.
Get The App
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.