Pound Gains after U.K. Mortgage Approvals Exceed Forecasts


Pound Gains after U.K. Mortgage Approvals Exceed ForecastsThe pound advanced the fourth straight day against the dollar and euro after a report indicated that U.K. mortgage approvals in the month of July exceeded expectations, indicating the housing market continues to grow despite stricter lending requirements.

The sterling rose 0.1 percent to trade at 79.05 pence per euro as of 4:26 p.m. in London. It also gained 0.1 percent to $1.6615. The U.K. currency got a boost from speculation the European Central Bank will roll out further stimulus when it meets on Sept. 4 as Bank of England officials considered whether to increase interest rates.

Another report indicated that U.K. factory activity recorded its 18th month of consecutive growth in August, though at the weakest rate since June 2013.

“In an overall weak-euro environment we would expect sterling to perform quite strongly against the euro,” Ian Stannard, a London-based head of European foreign-exchange strategy at Morgan Stanley, told Bloomberg News. “When we look at the potential for policy divergence, obviously the U.K. against Europe does span out.”

The Bank of England reported that mortgage approvals in July declined to 66,569, compared with 67,085 in June. Economists in a Bloomberg survey had expected a figure of 66,000. Consumer credit also grew 1.1 billion pounds in July, the strongest advance in four months.

Markit Economics announced that its manufacturing gauge declined to 52.5, the weakest level since June 2013, compared with 54.8 in July. However, the index stayed above the 50 mark, which separates growth from contraction.

Yield on the target 10-year gilt increased 0.02 percentage point, or two basis points, to 2.39 percent. It plunged 23 basis points in August, the most since January this year.To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com