POUND STRENGTHENS AS UK MORTGAGE APPROVALS IMPROVE TO 5-MONTH HIGH

Money - budget 2

BRUSSELS (Alliance News) – The pound spiked up against its major rivals in the European session on Thursday, after data showed that UK mortgage approvals hit a 5-month high in October.

Data from the British Bankers’ Association showed that the number of mortgages approved for house purchases rose to 40,851 in October from 38,690 in September. This was the highest since May, when mortgages totaled 41,702. Mortgages were expected to rise to 38,975.

Consumer credit grew 7% reflecting strong retail sales growth in October supported in the case of personal loans by favorable interest rates.

Further supporting the currency was rising risk appetite, as most European stocks climbed after US stock indexes hit fresh record highs overnight on the back of upbeat US data and minutes of the Federal Reserve’s November policy meeting pointing to an imminent rate increase.

The currency was also underpinned by funding plans announced by the UK Chancellor of Exchequer Phillip Hammond on Wednesday, when he ramped up his borrowing forecasts over the next five years to focus on infrastructure and investment to steer the economy from Brexit storm.

The currency was trading mixed in the Asian session. While the pound rose against the Swiss franc and the Japanese yen, it held steady against the euro and the greenback.

The pound reversed from an early low of 1.2402 against the greenback to hit a 2-day high of 1.2495. The next possible resistance for the pound-greenback pair is seen around the 1.26 mark.

The pound firmed to 1.2691 against the Swiss franc, a level not seen since September 22. Further uptrend may take the pound to a resistance around the 1.28 region.

The pound extended early rally against the Japanese yen, reaching more than a 4-month high of 141.13. On the upside, 144.00 is possibly seen as the next upside target for the pound.

Final figures from the Cabinet Office showed Japan’s leading index, which measures the future economic activity, decreased more than initially estimated in September.

The leading index fell to 100.3 in September from 100.9 in the previous month. The preliminary reading for September was 100.5.

The pound spiked up to a 2-1/2-month high of 0.8460 against the European currency, after having fallen to 0.8502 at 4:00 am ET. Continuation of the pound’s uptrend may see it challenging resistance around the 0.82 area.

Data from Destatis showed that Germany’s economic growth eased as initially estimated in the third quarter.

Gross domestic product expanded 0.2% sequentially, slower than the 0.4% growth seen in the second quarter. The quarter-on-quarter growth came in line with the estimate published on November 15.

Looking ahead, German GfK consumer sentiment index for December is due shortly.

The European Central Bank Chief Economist Peter Praet will speak on monetary union at an event hosted by the Austrian National Bank at 11:10 am ET.

At 12:15 pm ET, the Swiss National Bank Board Member Fritz Zurbrugg will give a speech titled “Negative Interest: Monetary Policy Necessary – But with what Risks for the Banks?” at the Swiss Economic Association in Bern.

Copyright RTT News/dpa-AFX

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