Pound pushed higher by construction data

Sterling is near a seven-month high following some solid UK construction output figures this morning.

The pound is trading at $1.5856, up 0.3% on the day after UK construction output grew by 2.2% in July, with analysts expecting an increase of 2.1%. This is the latest in a string of positive economic data from the UK.

Yesterday, Bank of England governor Mark Carney said that the £375 billion per month buying scheme is paying off and that this is visible in the form of improving retail, manufacturing and construction data. Mr Carney also confirmed the Bank is on track to achieve its inflation target of 2%.

Traders have been buying sterling as they feel that the Bank will begin to trim its monthly stimulus package as the economy improves. Mr Carney has already stated that the bond-buying operation will be reduced when the jobless rates falls.

At 3pm (London time), US business inventories are released, with economists predicting an increase of 0.4% on the month. If inventories decline it could indicate that consumer demand is high, which may lead traders to sell the pound and buy the dollar.

Spot FX GBP/USD (DFB) chart

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