Pound Sterling (GBP) Exchange Rate softened on weaker than forecast mortgage data

The Pound softened against the US Dollar and Euro on Friday following the release of weaker than expected UK mortgage approvals data.

Losses were limited as investors raised their bets that the Bank of England will raise interest rates sooner than expected despite Bank of England governor Mark Carney saying that a rise was not on the cards.

According to the British Bankers Association, the number of mortgages approved in December increased less than forecast. In its report the BBA said that mortgage approvals climbed to a seasonally adjusted figure of 46.5k from the previous month’s figure of 45.4k. The data disappointed as economist had been expecting a figure of 47.2k.

Demand for the pound still remained supported after data on Wednesday showed that the rate of unemployment in the U.K. fell to 7.1% in the three months to November, to stand just above the 7% level the BoE has said is its threshold for considering raising interest rates from their current record low of 0.5%.

The currency’s fall was short-lived as investors took positives from the data.

“This provides further evidence of a more active housing market, helped by growing consumer confidence and government support schemes such as Help to Buy,” said BBA statistics director, David Dooks.

Investors will now look ahead to next week’s UK GDP growth rate and house data. Both sets of data are expected to show a further improvement as the UK economy continues to strengthen.