GBP/USD close to session lows

British pound traded close to its lowest point against the US dollar on Friday, as market players awaited the release of US series of data later in the day in expectation that it will reinforce the view of a possible stimulus program scale back by the Federal Reserve Bank soon.

GBP/USD fell to a session low at 1.5475 at 9:55 GMT, after which consolidation followed at 1.5490, easing down 0.10% for the day. The pair was to find support in the area between 1.5425-1.5450, while resistance was to be encountered in the 1.5560-1.5580 zone.

Earlier today a report showed that the number of mortgage approvals in the United Kingdom increased to its highest level in five years in July, thus implying that Bank of Englands initiatives to spur lending in the country have begun paying off. Mortgage approvals rose to 60 624 in the month of July, marking their highest number since March 2008, exceeding expectations of a number of 58 800. At the same time, the overall amount of consumer credit and lending secured on dwellings in UK was 1.3 billion GBP in July. Data also showed that the average interest rate on lending with the purpose of purchasing a new house, stood at 3.17% in July, or the lowest rate since the beginning of record back in 2004.

Another report showed that consumer and business confidence in the United Kingdom strenghtened in August on the prospects of a recovering economy. According to data by Gfk research group, consumer confidence climbed to the highest in four years, as the research results showed a reading of -13 in August from -16 a month ago, surpassing preliminary estimates.

The British Chambers of Commerce revised up its economic forecast today and said that UK gross domestic product will advance 1.3% during 2013, as the previous prediction pointed an increase by 0.9%. Economic growth accelerated to 0.7% during the second quarter, the Office for National Statistics reported on August 23rd.

Last but not least, Nationwide said today that its index of house prices rose by 0.6% in August on a monthly basis, meeting expectations, as in July the index advanced 0.9%. The annual performance of the index pointed a 3.5% increase in August, from a 3.9% increase a month ago.

“Largely the pound’s been driven by the rise in short rates in the U.K. on the back of stronger-than-expected cyclical momentum in the economy,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London, cited by Bloomberg. “We’re close to a potential peak in the pound near term. The run of positive surprises we’ve seen on the economic data front could start to turn.”

In the mean time, the US currency received solid support on Thursday, after US Department of Commerce said that the revised Gross Domestic Product expanded by 2.5% during Q2 annually, exceeding expectations of a growth rate of 2.2%, while the preliminary estimate pointed a 1.7% expansion. Additionally, according to data by the Department of Labor, initial jobless claims in the United States dropped by 6 000 to 331 000 during the week ending on August 24th 2013, almost in line with experts’projections of a drop to 332 000 claims. The indicator remained close to its lowest point, recorded in October 2007.

Later on trading Friday the United States was to release reports on the index of core personal consumption expenditures, personal income, personal spending, the Chicago PMI and the final reading of University of Michigan Confidence index. Better than projected results are expected to strengthen the case for a reduced stimulus program by the Federal Reserve.

Elsewhere, the pound was set for its largest monthly advance in a year against the euro, as EUR/GBP cross was steady, ticking up a mere 0.01% for the day to trade at 0.8543 at 11:21 GMT. The pound advanced 2.4% against the common currency in August, marking the most considerable monthly gain since July 2012. GBP/JPY pair was losing 0.09% on a daily basis to trade at 152.37 at 11:23 GMT.

Ultimately, the sterling has strengthened 5.4% during the past six months, or the best performing currency of the 10 developed-nation currencies, tracked by Bloomberg Correlation-Weighted Indexes. The euro has gained 4.5%, while the US dollar has appreciated 3%.