British pound traded lower against the US dollar on Tuesday, despite that a report showed the number of mortgage approvals in the United Kingdom rose more than expected in September, as speculation appeared that economic data scheduled for release this week would not be sufficiently strong in order nations economy to sustain gains.
GBP/USD fell to a session low at 1.6065 at 11:00 GMT, after which consolidation followed at 1.6075, losing 0.42% for the day. Support was likely to be received at October 17th low, 1.5941, while resistance was to be encountered at October 28th high, 1.6207.
Earlier on Tuesday it became clear that the number of mortgage approvals in the United Kingdom increased in September, reaching the highest monthly level during the past over five years, which came as another signal that UK housing sector was picking up the pace. According to data by Bank of England, 66 735 mortgages have been approved in the month of September, as in August their number pointed 63 396, which was a revision up from 62 226 previously. This appeared to be the highest number of approved mortgages since February 2008. Data showed that interest rates on loans, purposed for purchasing an existing or a new home have reached fresh lows in September. The above mentioned result also suggested that governments initiatives to revive mortgage sector in the country have probably begun to pay off, although some experts were concerned that such developments may lead to another house price bubble. Yesterday Hometrack reported that the index of home prices in the UK rose 3.1% in October on annual basis, or the fastest pace since November 2007, after another 2.4% advance a month ago.
On the other hand, net lending secured on dwellings in the country slowed down to 1.0 billion GBP in September from 1.1 billion GBP in August, while expectations pointed the indicator will advance to 1.3 billion GBP in September. Net consumer lending also decreased in September, reaching 0.4 billion GBP, as a month ago it amounted to 0.6 billion GBP.
“The economy is recovering but we would be getting ahead of ourselves to suggest there’s an explosion in growth,” said Jane Foley, a senior currency strategist at Rabobank International in London, cited by Bloomberg. “There’s a lot of good news already in the price of the pound and it will take something significant to push it higher.”
However, speculation appeared that upcoming economic data will not be strong enough in order to support nations economic growth. A gauge of UK home prices probably rose 0.7% in October, following 0.9% increase a month ago, Nationwide Building Society is expected to report, according to a survey of experts before the official data on Thursday. An index, gauging manufacturing industry in the country, probably slowed down to a reading of 56.4 in October from 56.7 in September, according to another survey, as Markit Economics will publish the official data on Friday.
The yield on UK benchmark 10-year gilts was 2.60%, after falling to 2.59% on October 23rd, or the lowest level since August 27th.
Meanwhile, the sterling was lower against the euro, with EUR/GBP cross advancing 0.28% on a daily basis to trade at 0.8568 at 12:15 GMT. In addition, GBP/JPY pair was losing 0.14% to trade at 157.49 at 12:17 GMT.