Pound Spikes Up After U.K. Construction PMI And Mortgage Approvals Data

During early European trading on Wednesday, the pound spiked up against its most major counterparts after the release of the country's mortgage approvals data for March and the CIPS/Markit construction PMI report for April.

U.K. mortgage approvals increased unexpectedly in March, the Bank of England said today. The number of mortgages approved in March totaled 49,860 compared to 49,029 a month ago. The expected level for March was 48,000.

A separate data from a survey by Markit Economics and the Chartered Institute of Purchasing and Supply (CIPS) showed that activity in the British construction sector increased at a slower pace in April.

The seasonally adjusted purchasing managers' index (PMI) for the construction sector dropped to 55.8 in April from 56.7 in March, which was the highest reading in twenty-one months. Economists were looking for a reading of 55

The pound climbed to a new 1-year high of 1.4809 against the franc with 1.50 seen as the next upside target level. The pair ended Tuesday's deals at 1.4729.

Against the euro, the pound reached a new 22-month high of 0.8118 from Tuesday's close of 0.8162. The next upside target level for the pound is seen at 0.81.

The Eurozone manufacturing sector contracted more than initially estimated for April, Markit Economics said today.

According to the survey, the Purchasing Managers' Index for manufacturing fell to a near three-year low of 45.9, from 47.7 in March and below the earlier flash estimate of 46.0. The headline index signaled contraction in each of the past nine months.

After falling to a 5-day low of 1.6187 against the dollar at 4:20 am ET, the pound rebounded immediately. The pound is now trading at 1.6228 against the greenback with 1.63 seen as the next upside target level.

The U.S. ADP employment data for April and factory orders for March are set for release in the early New York session.