FX round-up: Sterling gains on the back of August construction PMI

Cable gained at the end of the week following the release of an upbeat reading on the country´s construction sector.

The Markit/CIPS construction sector purchasing managers´ index jumped from 45.9 to 49.2, easily outpacing expectations for an improvement to 46.2.

“Despite another month of reduced output, the latest figures can be viewed as welcome news overall after a challenging summer for the construction sector. The move towards stabilisation chimes with the more upbeat UK manufacturing PMI data for August, and provides hope that the near-term fallout from Brexit uncertainty will prove less severe than feared,” said Tim Moore, senior economist at IHS Markit.

The July reading for the Markit UK construction PMI had marked an 85-month low.

Acting as a backdrop, the US dollar was mostly on the frontfoot on Friday, with trading in its cross against sterling a notable exception.

Indeed, the US dollar index edged higher by 0.24% to end the session at 95.88, gaining ground versus both the European single currency, and closing at 1.1156, and the Japanese yen.

The latest monthly US jobs figures were somewhat weaker than expected in comparison with analysts´ estimates, leaving economists divided as to its implications for the chances of another tightening move by the Fed come its 20-21 September policy meeting.

US employers added 151,000 jobs in August, compared to expectations of 180,000, the Labor Department revealed. However, July's reading was revised to show a gain of 275,000 jobs, up from a previous estimate of 255,000.

The unemployment rate held at 4.9%, missing forecasts for a drop to 4.8%.

Data on US average hourly earnings and the length of the average workweek in August - which are also contained in the monthly employment report - both came in below forecasts, although the former could be partially accounted for by seasonal factors, according to analysts.

Economists at Goldman Sachs, for their part, again seemed to lie towards the more aggressive end of the spectrum of analysts´ forecasts when it came to the September FOMC, having reportedly stated on 2 September that they attached a 55% probability to a rate hike at that meeting.