- Slow Construction Growth Halts Pound Recovery Against Euro
The Pound Sterling five days recovery run came to an abrupt end on Monday after data showed that growth in the construction sector has started slowing.
The currency which plunged to an 8-year low against the Euro in August, recovered mildly on better than expected manufacturing growth and moderate consumer spending in the second quarter. However, the weak growth recorded in the construction sector in August due to low business investment and economic uncertainty halted pound recovery on Monday and plunged the embattled currency further against the Euro currency.
So far, the pound has lost all its Friday’s gains to trade at 0.9217. Again, validating analysts’ earlier forecast that Euro-Pound would go beyond parity by the end of March 2018.
According to Steve Barrow, a strategist at Standard Bank, “it’s not a huge leap of faith to suggest we could get up to the parity area.”
“In euro-Pound we’ve had a very strong conviction and it’s one of the biggest forecasts I ever remember making on a major currency,” David Bloom, HSBC’s London-based global head of currency strategy. That’s “a 20 percent move and that’s quite something. It’s very unusual that we make such, what was at that time, an outrageous forecast” but “we are roughly half way there and we believe in it,” he said.