British pound rises as UK Construction PMI jumps

The British pound has extended its gains for a third straight trading day. In the North American session, GBP/USD is trading at 1.2757, up 0.45% on the day.

British UK Construction PMI accelerates in November

The UK Construction sector rose to 55.2 in November, up from 54.3 in October and above the market estimate of 53.4. This indicates strong expansion but the report contained mixed figures. Commercial work sparkled as it jumped to its highest level in 2.5 years. On the other side of the coin, residential work fell to its lowest level since June, as home-building was been dampened by high interest rates and weak consumer confidence. The UK economy is fragile, with a stagnant services sector and manufacturing in contraction mode.

BoE signals four rate cuts in 2025

The Bank of England has joined the easing cycle and has lowered rates twice this year, with the last cut in November. The BoE meets on Dec. 19 and is widely expected to hold the cash rate at 4.75%.

The markets have priced in three rate cuts in 2025 and there was some surprise when BoE Governor Bailey hinted on Wednesday that the central bank was looking at four rate cuts if the BoE’s inflation projections proved correct. Bailey noted that inflation had fallen one percent lower than the BoE forecasted a year ago. Bailey’s optimistic stance on inflation means that the BoE could be aggressive in its rate-cutting cycle in 2025.

With US inflation largely contained, the nonfarm payroll release has again become one of the most significant economic releases on the calendar. The November report is expected to rise to a respectable 200 thousand, after a weak gain of 12 thousand in October, which was driven downwards by hurricanes and work stoppages at Boeing.

GBP/USD Technical

• GBP/USD tested resistance at 1.2737 earlier. The next resistance line is 1.2775
• 1.2684 and 1.2646 are the next support levels

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