Technical Bias: Slightly Bearish
- GBPUSD rebounds to 1.5300, but market sentiment remains bearish.
- UK construction sector rebounds in May from 22-month low.
- UK mortgage approvals rise at the fastest rate in six years.
The GBPUSD rebounded on Tuesday following three consecutive declines, but underlying market sentiment is against assuming long positions until price action shows a significant rebound over last week’s reversal.
The GBPUSD climbed to a daily high of 1.5326 in the European session. It would subsequently consolidate at 1.5287, advancing 0.6 percent. The pair is currently testing the 1.5282 resistance. A break above that level would expose 1.5364. On the downside, initial support is likely found at 1.5144.
Sterling has tumbled more than 400 pips since May 15, when Cable was riding the wave of post-election optimism.
UK Construction PMI Rises
The UK construction sector rose faster than forecast in May, as business activity rebounded from April’s 22-month low.
Markit Group’s UK construction PMI climbed to 55.9 in May from 54.2 in April. A median estimate of economists forecast an increase to 55.0.
UK construction companies expressed their highest level of confidence since February 2006, having added workers at the fastest rate in five months. Growth in incoming work increased for the first time in three months, Markit data showed.
“May’s survey provides the first sign of a postelection bounce in the UK construction sector,” said Markit senior economist Tim Moore in a statement. “With a sustained period of policy uncertainty no longer on the horizon, business confidence surged back to its highest level since early-2006.
“Additionally,” he added, “construction firms experienced an upturn in new business growth from April’s near two-year low and job creation was the fastest recorded so far in 2015.”
Mortgage Approvals Rise
Separately, the Bank of England said mortgage approvals surged by the most in six years in April, underlying the strength of the consumer-led recovery.
Mortgage approvals for home purchases reached 68,076 in April, the highest level in 14 months. The increase was well above the March rate of 61,945 and significantly higher than forecasts calling for 62,900.