The Pound (GBP) exchange rate fell against the Euro (EUR), US Dollar (USD) and other most traded peers on Wednesday after domestic data showed that the number of mortgages approved fell to a 14-month low in September, adding to concerns that the UK economy is slowing.
According to the Bank of England (BoE) the number of new mortgages approved in September fell from the preceding month’s number of 64,054 to 61,267, the lowest figure recorded in 14 months.
New approvals for mortgages have been falling steadily since the start of the year where in January approvals reached the highest level in six years. The softer report by the BoE adds to data released last week by the British Bankers Association.
The data added to concerns that the UK economy is slowing and confirmed the BoE’s forecast for a slowdown in the nation’s housing market. Earlier in the year BoE governor, Mark Carney said that the overheating UK housing market was the biggest threat to the nation’s economic recovery.
Britain’s property market is cooling and Hometrack Ltd. said London has hit an “inevitable” slowdown after a surge in values to a record. The Bank of England has imposed tougher mortgage rules to keep lending in check, and policy makers said this month that house-price growth is slowing to a “more sustainable pace.”
More importantly was a separate report, which showed that business lending also fell in September. The BoE report showed that business lending declined by £710 million in September from August. Lending to small and medium sized businesses also declined by £157 million, a drop of 2.2% compared with the previous year.
With the UK data out of the way, market investors are now turning their attention to the US Federal Reserve’s eagerly anticipated policy statement due later in the day. The Fed is forecast to announce the conclusion of its monthly quantitative easing programme but is likely to be dovish regarding an interest rate rise.
Concerns over the weakness of the Eurozone and a slowdown in China are also causing economists to push back their expectations for an interest rise by the Bank of England as well as the Federal Reserve.
The Pound could experience further volatility on Thursday if the latest house price data comes in below economist forecasts. The data due to be published by Nationwide, is widely expected to show that prices rose by 8.5% in October, a dip from the 9.4% seen in September.
UPDATE
The Pound Sterling to Euro exchange rate is currently trending in the region of 1.2709.
The Pound Sterling to US Dollar exchange rate is currently trending in the region of 1.5984.
Although German labour market data has printed very positively on Thursday, the Pound has gained against the Euro. This can be attributed to traders hedging their bets ahead of the German inflation data due for publication on Thursday afternoon.
Sterling has declined against the US Dollar, however, after the Federal Open Market Committee decided to end bond buying. However, a huge US Dollar surge has been stymied by Fed officials using tired language to delay the timing of a benchmark rate increase.
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,1.6122 ,
Pound Sterling,,Euro,1.2654 ,
Pound Sterling,,Australian Dollar,1.8133 ,
Pound Sterling,,New Zealand Dollar,2.0304 ,
US Dollar,,Pound Sterling,0.6202 ,
Euro,, Pound Sterling ,0.7901 ,
Australian Dollar,, Pound Sterling ,0.5514 ,
New Zealand Dollar,, Pound Sterling,0.4829 ,
[/table]
