Citi: GBP fundamentals and technicals
Outlook for the British pound:
- The U.K. Construction PMI in July shows that construction activity continues to surge as housing activity growth reaches fastest since late-2003;
- Building activity is being fueled by surging demand for new construction projects;
- New orders in the industry continued to rise in July at a rate rarely exceeded in the survey’s 17-year history;
- Meanwhile, sharp increases in overall construction activity led to a new survey-record pace of job creation;
- The upbeat U.K. economic outlook will likely support the BOE to hike rates earlier in Q4 this year and accelerate the pace in 2015.
- Since September 2013, GBP is trading in a bullish trend and each retracement dropped by 2.2% on average;
- The recent plunge in GBP may found support at 1.6814 (a 2.2% drop from 1.7192) or at 1.6693. The pair will likely rebound to 1.7192 upon consolidation.