When is the UK construction PMI/ BOE inflation report hearings and how could it affect GBP/USD?

The UK construction PMI/ BOE inflation report hearings overview

The UK construction PMI for August is due for release today at 0830GMT, with the figure expected to come in at 55.0, down from July’s 55.8 reading. Meanwhile, the Bank of England (BOE) inflation report hearings, due at 1215 GMT, will also garner a lot of attention, especially the Governor Carney’s testimony.

Analysts at TD Securities (TDS) noted: “Bank of England Governor Carney, alongside Chief Economist Andy Haldane and external MPC members Michael Saunders and Silvana Tenreyro, appear before the Treasury Select Committee to discuss the August Inflation Report.”

However, “focus will be squarely on Governor Carney as he will be asked about reports that he may extend his term by another year to mid-2020. Finally, Parliament returns for two weeks before another recess for the Party Conferences and Brexit headline volatility will rise. Focus will be on the Select Committee on Exiting the EU which sits Tuesday, Prime Minister's Questions on Sep 5, and the Sep 11 Lords vote on the Trade Bill, where there is some talk Labour Peers may try to vote down the bill and send it back to the House of Commons,” TDS added.

Deviation impact on GBP/USD

Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 10 and 45 pips in deviations up to 2 to -2, although in some cases, if notable enough, a deviation can fuel movements of up to 70 pips.

How could affect GBP/USD?

Technically, the pair looks to extend the drop below the 1.2845 (Aug 29 low/ 20-DMA) support area in a bid to test the 1.2800 round number. Below which floors open towards the 1.2759 daily classic S1. On the upside, a convincing break above 1.2885 (daily pivot), GBP/USD could retest 1.2911/21 (10 & 5-DMA) en route 1.2987 (50-DMA).

A disappointing UK construction PMI report cannot be ruled today, given Monday’s downbeat manufacturing PMI reading. The construction PMI has widely shown the similar behaviour as the manufacturing and services PMIs, analysts Societe Generale pointed out in a research note.

However, markets could see a little reaction on the data release, as it is likely to play a second fiddle to the main event risk for the pound today - the BOE August inflation report hearings.

Key Notes

Market themes of the Day: The Bank of England parliamentary testimony and US activity gauge headline

Sterling Falls as Traders Wait for Inflation Hearings

GBP/USD Forecast: Sell-off to accelerate below mid-1.2800s, BoE Inflation Report hearings in focus

About the UK construction PMI/ BOE inflation report hearings

The PMI Construction released by the Chartered Institute of Purchasing & Supply and Markit Economics shows business conditions in the UK construction sector. It is worth noting that the construction sector does not influence, either positively or negatively, the GDP as much as the Manufacturing sector does. A result that values above 50 signals appreciates (or is bullish for) the GBP, whereas a result that values below 50 is seen as negative (or bearish).

The Treasury Committee is appointed by the House of Commons to examine the expenditure, administration and policy of HM Treasury, HM Revenue & Customs, and associated public bodies, including the Bank of England and the Financial Services Authority.