European session review: GBP weakens as April PMI data show record decline in UK construction activity

GBP fell against its major rivals in the European session on Wednesday after the report by IHS Markit showed that IHS Markit/CIPS UK Construction PMI plunged from 39.3 in March to 8.2 in April. The latest reading pointed to the steepest pace of contraction in the sector since data were first collected in April 1997. Economists had forecast the indicator to fall only to 22.2. According to the report, all three main categories of construction work experienced a survey-record decline during April due to stoppages of activity on site amid coronavirus pandemic, with decreases in house building and commercial activity exceeding that for civil engineering. The April survey also highlighted a severe impact on construction supply chains, with closures at builders merchants and stoppages of manufacturing production leading to widespread supply shortages.

Meanwhile, British Prime Minister Boris Johnson said he will present the details of a reopening plan for the UK on Sunday. He also added that they want to get going with some of the lockdown easing measures on Monday.

Market participants are also awaiting the outcomes of the Bank of England's (BoE) meeting on Thursday, which could provide more catalysts for movement in GBP.

The ongoing Brexit negotiations with the European Union (EU) also remained in investors' focus. The UK insists it won't request an extension to EU-UK trade talks, due to end in December 2020, creating downside risk for GBP.