Pound lifted by construction report

The pound is higher against the US dollar after the UK reported solid construction figures in September.

The latest UK construction purchasing managers' index (PMI) came in at 58.9. This represented a slight decline from the August reading of 59.1, which was a six-year high. Even though the report failed to match or exceed last month’s reading, traders welcomed the news at it still demonstrates that the UK has turned a corner. The survey highlighted that residential construction increased at its fastest rate in nearly ten years, and that job creation in the sector increased for the fourth month in a row.

At lunchtime, the US ADP employment report showed that 166,000 new private sector jobs had been created. This gave the pound a boost, as the market consensus had been for an increase of 177,000 jobs.

At 8.30pm (London time), Federal Reserve chairman Ben Bernanke will make an announcement. GBP/USD jumped after the last Fed meeting two weeks ago, when the stimulus package was left unchanged. If Mr Bernanke drops any hints about tapering, we could see traders selling the pound and buying the dollar.

Spot FX GBP/USD chart

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