UK Lenders See Large Increase in Demand for Buy-to-Let Mortgages
Demand for Buy-to-Let (BTL) mortgages increased significantly during the final quarter of 2015 according to the Bank of England’s (BoE) Credit Conditions Survey. Lenders reported an increase in risk appetite, fuelling a rise in the number of unsecured loans being provided. Credit scoring criteria for personal loans were seen to have weakened, while criteria for credit cards saw no change.
Euro (EUR) Bullish Despite Mixed Spanish Data
Inflation data from Spain has proven to be a bit of a double-edged sword today. The Harmonised Inflation Rate dropped from 0.2% to -0.4% in December as forecast, with the year-on-year (YoY) rate rising from -0.4% to -0.1%. Inflation in Spain posted no growth in 2015, which is an improvement upon last year’s -0.3% deflation.
Yesterday…
Confidence in UK Economic Prospects Slumps
According to a small survey by the Chartered Institute for Securities & Investments (Cisi), the number of people feeling positive about the UK’s economic prospects has fallen. Net positive respondents has dropped to 6% from the 31% recorded in the spring. Low wages, the EU and global economic slowdown all featured as reasons for the drop in positivity given by the circa 1,000 people surveyed.
Earlier…
Pound Sterling (GBP) is trending in a narrow range following the latest Monetary Policy Committee (MPC) meeting, during which UK interest rates were left on hold. The Euro is performing well overall after data showed that the German economy registered strong growth in 2015.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Trending Down Following MPC Dovishness
Ian McCafferty remained the only hawk among Bank of England policymakers today, voting in favour of a 0.25% rise. Citing his belief that UK inflation will rise faster than the Bank of England (BoE) currently predicts, McCafferty voted for a rate increase for the sixth consecutive meeting, while the other eight policymakers remained against a change in the benchmark rate.
McCafferty’s continued support for a rate hike has helped strengthen Pound Sterling today, as it shows that he believes the worsening global conditions won’t have an overly adverse effect on the UK economy. Other policymakers noted that ‘Although indicators of private domestic spending appear healthy, business surveys imply that the near-term outlook for aggregate activity is slightly weaker than in the MPC’s November central projection.‘
The recent slew of negative data, coupled with concerns over the Chinese economy, have persuaded forecasters that the next rate hike will be delivered later than initially planned. A poll by Reuters found that the median forecast by economists placed the next rate hike in Q2, although since then predictions have been revised and analysts now predict it will be Q3 before the MPC changes policy. Market sentiment, on the other hand, shows that investors aren’t expecting a rate hike until January 2017.
The GBP/EUR exchange rate is currently trending 1.3225.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Trending Up on German GDP Data
After disappointing inflation data released earlier in the year, the latest news from Germany has cheered economists. The German economy grew by 1.7% in 2015, according to an initial estimate, 0.1% more than experts had predicted. Growth was the strongest it has been for four years, with a rise in consumer and government spending having been the main economic drivers. Disappointing trade performance had dragged on growth, however, with imports rising more than exports.
In a welcome change, Greece has been able to produce some positive news, with Greek Economy Minister George Stathakis claiming that the government’s previous prediction that the economy would contract had been wrong. Stathakis claims that Greece won’t run a budget deficit during 2016 and that the economy could grow by up to 1.5%, with a rise in exports, strong tourism and €4.5 billion in structural funding coming from the Eurozone as key drivers.
The EUR/GBP exchange rate is currently trading between 0.7528 and 0.7610.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast: Quiet Data Day Ahead
There is little to spark movement in the GBP/EUR exchange rate tomorrow, with only low importance data for UK construction and the Eurozone Trade Balance in Euros due to be release. Monday sees the release of UK house price figures, which are likely to add to bubble concerns if they show a strong increase in property values.
The GBP/EUR exchange rate is currently trading between 1.3135 and 1.3280.
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