2019.03.0407:09:00UTC+00Pound Falls As U.K. Construction Activity Shrinks To 11-month Low

The pound dropped against its major counterparts in the European session on Monday, erasing its early gains, after a data showed that U.K. construction sector activity contracted in February for the first time since March 2018.

Survey data from IHS Markit showed that the seasonally adjusted construction Purchasing Managers' Index, or PMI, fell to 49.5 from 50.6 in January. Economists had forecast a score of 50.5.

The reading was the lowest since March 2018, when snow disruption hurt the sector.

Any reading below 50 suggests a contraction in the sector.

Meanwhile, European stocks rose as investors remained focused on U.S.-China trade developments and looked ahead to the ECB meeting later this week for directional cues.

On the trade front, the U.S. and China appear more likely to reach some sort of trade agreement when U.S. President Donald Trump and Chinese leader Xi Jinping meet later this month.

The currency traded mixed against its major counterparts in the Asian session. While it held steady against the euro and the greenback, it rose against the yen and the franc.

The pound slipped to 1.3199 against the greenback, from a high of 1.3254 hit at 4:30 am ET. On the downside, 1.30 is possibly seen as the next support level for the pound.

The pound retreated to 147.62 against the yen and 1.3208 against the franc, from its early high of 148.31 and a 4-day high of 1.3271, respectively. The next possible support for the pound is seen around 146.00 against the yen and 1.30 against the franc.

After rising to a 4-day high of 0.8558 against the euro at 4:00 am ET, the pound reversed direction and pulled back to 0.8590. The next likely support for the pound is seen around the 0.87 area.

Survey data from Sentix showed that Eurozone investor confidence improved in March, remaining negative for the fourth consecutive month.

The investor confidence index for the euro area rose to -2.2 in March from -3.7 in February. Economists had forecast -3.1.

Looking ahead, U.S. construction spending for December is scheduled for release in the New York session.