The Pound Sterling (GBP) to US Dollar (USD) exchange rate was little changed holding close to a two-week low on Monday following the release of mixed economic data releases out of the world’s largest economy.
Earlier in the session, the Pound came under pressure from the publication of economic data, which showed that the number of mortgages approved by UK banks fell more than forecast in August.
According to the Bank of England, the number of approved mortgages eased from July’s figure of 66,100 to 64,212, the lowest number recorded since May and was weaker than the 65,000 forecast by economists.
August tends to be a quiet period for house sales but the decline suggests that the prospect of an interest rate increase next year is deterring potential homebuyers.
The BoE’s plans to cool down the housing market also seem to be having an effect. Earlier in the year BoE governor, Mark Carney warned that an overheating housing market was the biggest threat to the economic recovery.
A separate report also showed that the number of remortgages eased from the 32,800 seen in July to 32,273.
‘The data reinforces the impression that housing market activity is seeing an underlying loss of momentum and slowing down. There are also signs in the latest survey evidence, such as from Hometrack and the RICS, that buyer interest has come off its early-2014 highs,’ said Howard Archer, chief economist at IHS Global Insight.
The US Dollar meanwhile saw further gains retrained by the publication of mixed data releases.
The first report released showed that Consumer Spending and personal income increased in August after recovering from a weak July period. Spending rose by 0.5% last month due to a surge in auto sales, countering the 0.1% dip recorded in the preceding month. The report also showed that personal income, reflecting income from wages, investment, and government aid, rose 0.3%, up from 0.2% in July, broadly in line with forecasts.
Following on from that data was the release of Pending Home Sales. According to the National Association of Realtors, its pending home sales index fell by 1% to 104.7 last month, a drop from the 105.8 figure recorded in July. The figure was also below economists’ expectations for a decline of 0.1%.
The mixed data was rounded off by the Dallas Federal Reserve Manufacturing data, which came in better than expected. The index increased to 10.8, up from the previous month’s figure of 6.8 and beat forecasts for a number of 10.5.
Pound Sterling to US Dollar Exchange Rate Forecast
With the week set to be a busy one in terms of economic data releases for both currencies, we can expect to see volatility in the currency pair.
Of particular interest to GBP/USD traders will be Wednesday’s US ADP Employment report and Manufacturing PMI releases.
If those reports come in strongly then we can expect to see the ‘Greenback’ receive further support as it will likely increase speculation that the Federal Reserve is edging closer to announcing an interest rate hike.
UPDATE
Although the UK’s Consumer Confidence gauge and Nationwide House Price report fell short of expectations on Tuesday, the Pound was boosted against the US Dollar by a stronger-than-forecast second quarter growth figure.
The UK economy expanded by 0.9% in the second quarter on a quarter-on-quarter basis, beating previous estimates of 0.8% growth.
The data helped the Pound advance on several of its most traded currency counterparts.
GBP/USD gains were modest ahead of the publication of the US Consumer Confidence index.
US Dollar (USD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
US Dollar,
,Pound Sterling,0.6161 ,
US Dollar,,Euro,0.7884 ,
US Dollar,,Canadian Dollar,1.1145 ,
US Dollar,,Australian Dollar,1.1473 ,
Pound Sterling,,US Dollar,1.6232 ,
Euro,,US Dollar,1.2684 ,
[/table]
