Encouraging UK Mortgage Approval Data Not Enough To Stop GBP EUR Rate Heading Lower

Published: Monday, 29 October 2012 18:00 BST - Written by Tim Boyer

STORY LINK Encouraging UK Mortgage Approval Data Not Enough To Stop GBP EUR Rate Heading Lower

This morning’s UK Mortgage Approval data provided further evidence that the green shoots of recovery are emerging in the British economy, following last week’s encouraging Q3 GDP data. The gauge of secured loans revealed that 50,000 new mortgages had been signed of in the UK last month, ahead of expectations of a 48,700 showing. Britain’s housing sector has been responsible for rapid improvements in the nation’s economic fortunes on more than one occasion in the last few decades and this key market is dependent on new loans in order to fund growth – without these, the housing market simply involves existing homeowners swapping stock. In spite of this morning’s relatively firm UK data, Sterling has struggled in the currency market so far today, leaking a small amount of support against nearly all of the other sixteen most-actively traded currencies. The GBP EU exchange rate has dipped from an intraday high of 1.2463 down to its current level of 1.2415. GBP USD has registered losses of a similar magnitude, edging lower off a high of 1.6092 to currently stand at 1.6028.

The US Dollar has made some small gains against most of the other majors on the day thanks to this afternoon’s Personal Consumption Expenditure data for September which showed at 1.7%, up from last month’s 1.6%. Today’s session has been marked by thinner than usual trading volumes, with activity in New York currency desks at ultra-low levels thanks to the evacuation of much of New York City due to the approach of Hurricane Sandy. The New York Stock Exchange and the NASDAQ are expected to remain closed tomorrow, so it appears likely that tomorrow will also bring calmer than expected trading conditions. The major risk event of note tomorrow comes in the form of German Unemployment data, penned in for release at 08:55 GMT. A strong showing for these key numbers could send the GBP EUR exchange rate back down through its existing 5 month low at the bottom end of the 1.2200s.

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