Pound Slips Against Dollar as Data Nosedives

UK construction firms recorded their sharpest dip in activity since just after the Brexit vote in June of 2016 as clients put on hold new projects due to uncertainty about the state of the economy. The Markit UK Construction PMI sank to 48.1 last month from August’s 51.1, easily trailing the consensus of economists polled by Reuters. In a statement following the release of the index, Markit said the likelihood of the Bank of England raising interest rates next month also played an important role behind the slowing pace of home building.

GBPUSD is currently trading around the 1.3274-mark. The short-term trend in the pair has turned bearish, with 1.3220 representing the immediate support on the downside. A break below that zone could see the selling pressure in the currency pair intensify.

According to a leading industry gauge released early Wednesday, the Japanese services sector expanded at the most sluggish rate in 11 months in September after the rate of new order growth eased. On a seasonally adjusted basis, the Markit/Nikkei Japan Services PMI fell to 51.0 last month from 51.6 in August, marking the lowest point since October of 2016. However, the index continued to remain above the 50-threshold that separates growth from contraction for the 12^th-straight month. The index for new businesses dropped to 52.0 in September from 52.4 in the prior month.

Although the Japanese economy grew at an annualized 2.50% during April-June, buoyed by stronger consumer spending and housing investment, many economists reckon this pace is unsustainable and forecast an approaching moderation in growth. The EURJPY pair is currently hovering around 132.400 after a limited reaction to the economic data.