British pound came off highs unseen in ten months against the US dollar on Friday, as a report said that consumer lending and lending secured on dwellings in the United Kingdom mismatched forecasts, but, however, cable remained supported following Bank of England (BoE) Governor Mark Carneys statement on Thursday.
GBP/USD slid to a daily low at 1.6318 at 9:45 GMT, after having touched fresh 10-month highs at 1.6375 earlier in the day. The pair consolidated at 1.6323, losing 0.13% for the day. Support was likely to be received at November 27th low, 1.6198, while resistance was to be met at January 2nd high, 1.6391.
According to a report by the Bank of England, the number of approved mortgages in the United Kingdom reached 67 701 in October, or the highest number since the country plunged into recession back in 2008, following a revised up number of 66 891 from 66 735 previously in September. Experts had anticipated that the number of mortgage approvals will climb to 68 500. Octobers number of approved mortgages appears to be the highest since February 2008, with their total amount reaching 15.7 billion GBP.
This data suggested that recovery of the housing market in the United Kingdom was already picking up the pace.
“The U.K. has reasonably decent growth, certainly better growth than its peers in the euro zone and the U.S., so in that context things are looking a little bit better for the pound for sure,” said Peter Kinsella, a senior currency strategist at Commerzbank AG in London, cited by Bloomberg News. “The pound is going to trade stronger into year-end.”
Net consumer lending slowed down to 0.5 billion GBP in October in comparison with a month ago, when it expanded to 1.1 billion GBP. Preliminary estimates pointed that lending will slow down at a lesser pace to reach 0.7 billion GBP.
Net lending secured on dwellings in the country reached 1.2 billion GBP in October, below expectations pointing 1.3 billion GBP, after in September indicators amount has been revised up to 1.1 billion GBP from 1.0 billion GBP previously.
The sterling received support after Bank of England Governor Mark Carney announced on Thursday that the central bank will end incentives for mortgage lending in an attempt to deviate threats to financial stability from the housing market. Carney stated that since 2014 allowances under the central bank’s Funding for Lending Scheme (FLS) will be available to business lending and no longer available for home loans.
Regulators also decided to end a measure, which did not require banks to hold capital against mortgages granted under the program. According to Carney, the FLS will be re-directed, where it may be needed the most, namely in order to facilitate access to credits for small businesses, after having reached its target on the housing market.
The yield on UK benchmark 10-year gilts was 2.74 percent, after having risen to 2.87 percent on November 21st, or the highest level since September 24th. UK gilts have fallen 3 percent during this year through Thursday.
Last but not least, house prices in the country soared to their highest level in more than five years in November, according to a report by the Nationwide Building Society. In annual terms, home prices rose 6.5% in November, exceeding expectations of a 6.2% climb and following a 5.8% gain in October.
Elsewhere, the sterling was losing ground against the euro, with EUR/GBP cross up 0.14% on a daily basis to trade at 0.8339 at 10:37 GMT. It became clear earlier on Friday that German retail sales unexpectedly dropped in October, which implied that retailers may have faced difficulties ahead of the holiday season. Sales fell 0.8% in October compared to September, with their value remaining the least since December 2012. Preliminary estimates of a 0.5% gain have been defied.
Despite the disappointing result in October, however, the overall positive tendency remains intact, as retail sales during the first 10 months of the year climbed 0.2% in comparison with the same period a year ago. On annual basis, sales dipped 0.2% in October mostly due to the sharp 1.5% drop in sales of products, excluding first necessities. On the other hand, sales of food, drinks and tobacco rose 1.1% in October on annual basis.
Overall retail sales results may not suggest yet whether private consumption in Germany will be influenced in a negative manner during the final quarter of the year. Retail sales represent approximately 25% of the total consumption in the country.
GBP/JPY pair fell 0.19% to trade at 166.96 at 10:38 GMT.