It was fairly quiet in the market yesterday in the wake of last week’s packed calendar with Sterling trading in a relatively tight trading range throughout the course of the day. The main focus in UK Parliament was the search for a replacement speaker for the House of Commons after John Bercow stepped down last week. Labour MP and deputy Speaker Sir Lindsay Hoyle has been elected by MPs as the new Commons Speaker, with criteria suggesting they must be politically impartial, which means Sir Lindsay will be required to resign from the Labour Party in order to carry out his role. It seems traders are continuing to wait on the side-lines for further news surrounding election manifestos and/or any change in the polling which still sees the Conservatives with a comfortable lead over their nearest rivals Labour.
In terms of economic data, the UK PMI construction data was released yesterday which saw construction activity shrink for the sixth month in a row in October, and at one of the fastest rates since the 2009 financial crisis. Brexit worries and a general economic slowdown were cited as some of the reasons for the lack of growth. Construction companies reported the seventh successive fall in new work, ordered less raw materials and did not replace staff who quit. Despite the negative data, Sterling was relatively unchanged.
Looking to the day ahead we have the headline PMI service sector data set for release from the UK. Out of the three sectors, the service sector is by far the largest contributor to the economy, proportionally contributing between 70-80% of economic activity, as a result the figure is closely monitored. It is expected that the figure will be below 50 for the second consecutive month in a row, indicating a second month of contraction. Sterling could be impacted by this outcome.
US ISM Non-Manufacturing PMI
In Europe, the October Eurozone Services PMI and the readings for France and Germany are due and expected to be revised slightly higher as well as Eurozone retail sales which are also set for release. The market is watching European data following the restarting quantitative easing.
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