UK gilts suffer following higher-than-expected October construction PMI

The United Kingdom’s gilts suffered during Friday’s afternoon session after the country’s construction PMI for the month of October, came in better than market expectations, also rising from the previous reading in September.

The yield on the benchmark 10-year gilts, jumped 3 basis points to 1.482 percent, the super-long 30-year bond yields surged nearly 2-1/2 basis points to 1.886 percent and the yield on the short-term 2-year traded 2 basis points higher at 0.781 percent by 09:50GMT.

At 53.2 in October, up from 52.1 in September, the seasonally adjusted IHS Markit/CIPS UK Construction Total Activity Index posted its second-highest level in 16 months. That said, it was still below the long-run survey average of 54.3. Construction output has risen every month since April. Higher activity was linked to the commencement of new contracts, overseas work and a general increase in business.

"These results point to the sector getting stuck in the mud as we approach March 2019, and with ongoing supplier delays and stock shortages, the sector may not be able to respond quickly enough anyway should there by a sudden upturn in fortunes," said Trevor Balchin, Economics Director at IHS Markit.

Meanwhile, the FTSE 100 rose 0.68 percent to 7,163.43 by 10:05GMT, while at 10:00GMT, the FxWirePro's Hourly Pound Strength Index remained neutral at 61.12 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex