UK gilts flat after August construction PMI disappoints; services PMI in focus

The UK gilts traded flat Monday after the country’s construction PMI for the month of August disappointed, coming in at 51.1, from 51.9 in July, missing expectations of 52.0.

The yield on the benchmark 10-year gilts, hovered around 1.05 percent, the super-long 30-year bond yields climbed nearly 1 basis point to 1.72 percent and the yield on the short-term 2-year traded flat at 0.18 percent by 10:40 GMT.

At 51.1 in August, the seasonally adjusted IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) remained above the 50.0 no-change threshold for the twelfth month running. However, the latest reading was down from 51.9 in July and pointed to the weakest overall UK construction performance since August 2016. A key reason for the slowdown was a lack of new orders to replace completed projects, according the survey respondents.

"There were signs that UK construction firms are bracing for the soft patch to continue into this autumn, with fragile business confidence contributing to weaker trends for job creation and input buying during August," said Tim Moore, Associate Director at IHS Markit.

Meanwhile, the FTSE 100 traded 0.17 percent lower at 7,426.25 by 10:20 GMT, while at 10:00GMT, the FxWirePro's Hourly Pound Strength Index remained slightly bullish at 95.06 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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