Slow data from the construction industry pushes sterling back from Monday’s highs

Sterling struggled against both the euro and US dollar on Tuesday as January’s purchasing managers’ index (PMI) data from the construction industry revealed the weakest expansion of UK construction output for nine months.

With sterling hitting a 2-week high against the US dollar on Monday following PMI data from the manufacturing industry, there has been renewed optimism around the state of the UK economy. However, after missing the expected level for construction for only the second time in six months, sterling struggled across the board – and this was despite news emerging that the European Union were willing to make broad concessions to ensure Britain’s continued membership of the union.

Today brings the release of PMI data from the services industry, which traditionally carries the most weight of the three data releases and after yesterday’s disappointing data will be very closely scrutinized. Tomorrow we have the Bank of England quarterly inflation report, and minutes from their latest monetary policy meeting, so we are in for a busy couple of days.