Bank of England Governor Mark Carney recently asserted that the central bank remains committed to supporting the UK economic recovery and will refrain from taking any action which would put that recovery at risk.
Carney’s statement helped the Pound recover losses against several of its major peers.
As the European session began on Tuesday Sterling held and extended gains against the US Dollar thanks to upbeat UK home-loans data.
According to British Bankers’ Association figures, the number of UK mortgage approvals issued in January hasn’t been seen since September 2007.
Home loans climbed to 49,972 last month from 47,086 in December. Economists had expected a reading of 47,150.
In a statement published with the data BBA Director of Statistics David Dooks observed; ‘Following on from last month, mortgage borrowing continues to rise compared to a year earlier as mortgage assistance schemes help first time buyers and housing chains more generally.’
Although today’s result adds fuel to housing bubble fears, some industry experts would argue that it’s further proof of the UK’s broad-based economic recovery.
After the report was released Sterling extended gains against the US Dollar but was little-changed against the Euro.
The Pound was also supported as Bank of England policy maker Ian McCafferty stated that an interest rate increase occurring in early 2015 is ‘not unreasonable’, although inflation risks would have to be observed.
McCafferty stated that ‘the exact timing of course is going to depend on events that have yet to unfold in terms of how the recovery proceeds over the course of the next six to 12 months or so.’
He added; ‘I suppose my view would be if anything, the risk I am watching for, because I think it fits with our mandate, is were we to see inflation risks or inflation behaviour start to develop. At the moment, that seems to be well under control. [But] If we did see some inflationary pressure – more than we currently expect in our central case – that would if anything, I suspect, lead the committee to consider slightly earlier rate rises.’
The Pound could extend gains against the US Dollar later today if the US consumer confidence measure for February declines as forecast by economists.
Economists are predicting that the US consumer confidence measure slid from 80.7 to 80 this month.
Of course tomorrow’s UK fourth quarter growth figures will have a significant influence on the direction Sterling takes for the latter half of the week.
Pound (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.6694 ,
Pound Sterling,,Euro,1.2137,
Pound Sterling,,Australian Dollar,1.8506,
Pound Sterling,,New Zealand Dollar,2.0068 ,
US Dollar,,Pound Sterling,0.5990,
Euro,,Pound Sterling,0.8238,
Australian Dollar,,Pound Sterling,0.5406,
New Zealand Dollar,,Pound Sterling,0.4983,
[/table]
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