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The pound was hit by another wave of sellers, thanks to the worse-than-expected reading for the U.K.’s construction PMI. And as a result, the pound ended up as the worst-performing currency of the morning London session.

Aside from pound, the euro is also noteworthy since it jumped higher at the start of the session and then had a more mixed performance. However, the euro was able to hold onto its gains and was the best-performing currency of the session.

Another noteworthy currency is the Greenback since it gave back its earlier gains and was the second weakest currency after the pound, even though there were no direct catalysts.

  • German Unity Day holiday today
  • Spanish unemployment change: 27.9K vs. 21.3K expected, 46.4K previous
  • U.K. construction PMI: 48.1 vs. steady at 51.1 expected
  • Euro Zone PPI m/m: 0.3% vs. 0.1% expected, 0.0% previous

Major Events/Reports

U.K. construction PMI slump

The U.K.’s latest manufacturing PMI was a disappointment, but the disappointment doesn’t stop there since Markit released the U.K.’s latest construction PMI report earlier today and the headline reading was revealed to have dropped to 48.1 instead of holding at 51.1 as expected.

Worse, the reading is below the 50.0 neutral level, which means that the construction sector contracted. Moreover, this is the first reading below the 50.0 mark since August 2016.

The details of the PMI report didn’t really dampen the disappointment a bit. For one, the U.K. experienced the “Sharpest drop in civil engineering work since April 2013.”

Another is that the “latest decline in work on commercial development projects was the second-sharpest since February 2013.

Yet another is that there was a “sustained drop in new work,” which led to a “relatively weak rate of job creation among construction firms.”

And according to Markit’s findings, “Respondents pointed to obstructive economic conditions and the Brexit blight of uncertainty, freezing clients into indecision over new projects.”

E.U.’s Juncker speaks

European Commission Jean-Claude Juncker was speaking earlier. And according to Juncker, he liked the “optimistic tone” of Theresa May’s speech from last week.

However, he said later that no “sufficient progress” have been made in the negotiation process. And as such, he thinks that “Until now, I can’t say that we are ready to enter the second phase of the negotiations.”

In short, no trade deals yet.

E.U.’s Barnier speaks

Shortly after Juncker spoke, Michel Barnier, the E.U.’s chief Brexit negotiator, also gave a speech. And he pretty much gave the same message as Junckers.

To begin with, Barnier said that there were still “serious differences” with regard to the major issues, namely the U.K.’s divorce bill, the rights of E.U. citizens in Britain, and the future of Northern Ireland.

However, Barnier also acknowledged that Theresa May’s speech was positive, adding that it “gave us some openings which are starting to be reflected in the negotiations.”

Even so, Barnier also stressed that it’s not yet time to talk about trade.

Some risk-taking in Europe

Rist-taking was apparently the more prevalent sentiment in Europe since the major European equity indices were slightly in the green.

And according to market analysts, the modest risk-taking was due to easing worries related to the independence referendum in Catalonia.

  • The pan-European FTSEurofirst 300 was up by 0.02% to 1,532.64
  • The U.K.’s FTSE 100 was up by 0.13% to 7,448.75

Major Market Mover(s):


There were some Brexit-related stuff early on when Barnier and Juncker spoke, but the pound resisted and soldiered on.

However, the pound’s resistance immediately collapsed when the U.K.’s latest construction PMI reading was revealed to have fallen below the 50.0 mark for the first time in 13 months.

GBP/USD was down by 19 pips (-0.14%) to 1.3249, GBP/CHF was down by 40 pips (-0.32%) to 1.2912, GBP/CAD was down by 39 pips (-0.23%) to 1.6569


The euro jumped higher when the morning London session rolled around. Price action on the euro then became more mixed after that.

Bullish pressure was notable, though, since most euro pairs grinded higher after the initial jump, so much so that the euro ended up as the best-performing currency of the morning London session.

There were no direct catalysts for the initial jump, but some market analysts were pointing to profit-taking after yesterday’s selloff, as well as expiring option contracts on the euro.

As for the subsequent signs of demand, profit-taking is also a possibility. Although it’s also possible that the euro got a lift because European bond yields were on the rise at the time.

EUR/USD was up by 27 pips (+0.23%) to 1.1749, EUR/NZD was up by 27 pips (+0.16%) to 1.6369, EUR/GBP was up by 32 pips (+0.36%) to 0.8867


The Greenback gave back its earlier gains and was the second worst-performing currency of the morning London session.

However, aside from profit-taking after yesterday’s broad-based Greenback rally, there weren’t really any apparent catalyst for the Greenback’s weakness.

USD/JPY was down by 11 pips (-0.10%) to 113.03, USD/CAD was down by 13 pips (-0.11%) to 1.2505, USD/CHF was down by 18 pips (-0.19%) to 0.9745

Watch Out For:

  • 12:30 pm GMT: Fed Governor Jerome Powell has a speech
  • 4:30 pm GMT: BOC Deputy Governor Sylvain Leduc will speak
  • Dairy auction currently underway (+0.9% previous); auction usually ends at around 2:00 pm GMT