GBP/CAD is slightly bearish on Monday, after flashing green in the morning. Currently, the pair is trading at 1.7380, down 0.09% as of 10:10 AM UTC. The price hit a daily peak at 1.7430 and a low at 1.7300, so it has been quite volatile.
UK Construction Activity Shows Record Monthly Decline
The pound couldn’t maintain the bullish stance after IHS Markit released its UK construction purchasing managers’ index (PMI) earlier today. The survey showed that Britain’s construction industry saw the sharpest decline in activity since the financial crisis. Last month, the indicator fell to 39.3 from 52.6 in February. The 50 mark separates growth from contraction. Analysts anticipated a decline given the disruptions caused by the COVID pandemic, but only to 44.0.
This was the largest monthly decline on record, and it seems the index will go even lower. The survey started in 1997.
Investors didn’t expect the construction industry to tumble at such a rate. The government hasn’t required general construction work to be halted amid the outbreak, unlike more severe shutdown measures imposed to companies operating in other sectors. Despite this, the research firm said that building firms had reported stoppages as they tried to abide by recommendations to keep workers 2 metres apart from each other. Also, new orders tumbled as well.
IHS Markit economist Tim Moore commented:
“Survey respondents widely commented on doubts about the feasibility of continuing with existing projects as well as starting new work. Construction supply chains instead are set to largely focus on the provision of essential activities such as infrastructure maintenance, safety-critical remedial work and support for public services in the weeks ahead.”
Last week, we reported that UK’s composite PMI, which merges the manufacturing and services sectors, declined to the lowest level on record at 36.0. The composite indicator that includes the construction industry fell to 36.3, which is also a record low.
The sterling is also bearish amid concerns over the increasing number of new cases and deaths related to coronavirus. Elsewhere, Spain and Italy report fewer cases. Also, UK Prime Minister Boris Johnson was hospitalized as the symptoms don’t go away after 10 days, though his office stressed that this was only a precautionary measure.
