As the Pound was boosted by better-than-forecast UK home loans data and the rising odds of the Bank of England increasing interest rates in 2015, the US Dollar softened against its British rival.
Pound gains were enabled by the news that UK mortgage approvals achieved a six-year high last month, and the currency received additional support as a BoE policy maker intimated that the central bank could introduce a rate increase in early 2015.
Sterling continued advancing on the ‘Greenback’ during the North American session as US consumer confidence figures came in below estimate.
The US consumer confidence gauge fell from a negatively revised 79.4 in January to 78.1 in February instead of coming in at 80.0 as expected.
The result was the latest in a series of signs that the US economic recovery might be losing momentum.
Although Federal Reserve Chairman Janet Yellen has expressed her commitment to sticking with the steady tapering of stimulus begun by her predecessor, she may have to revise her stance if US data keeps disappointing.
Earlier in local trading the ‘Greenback’ had been moderately supported by the news that the US house price index advanced by 0.8 per cent in December, month-on-month, following a gain of 0.3 per cent in December.
The report prompted this comment from economist Michael Feroli; ‘The housing recovery continues, but perhaps not as vigorously as it did in the first half of last year. Even so, appreciation trends still look pretty good even though they may not be as strong as they were.’
Meanwhile the US Richmond Red Manufacturing Index plummeted from 12 to -6 in February rather than dipping to 5 as expected.
As well as strengthening against the US Dollar the Pound also hit a four-day high against the Euro.
Tomorrow the GBP/USD pairing is likely to experience volatility as a result of UK growth figures for the fourth quarter.
US mortgage applications/new home sales figures may also have an impact.
US Dollar (CAD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
US Dollar,
,Pound Sterling,0.5983,
US Dollar,,Canadian Dollar,1.1072, 
US Dollar,,Euro,0.7269,
US Dollar,,Australian Dollar,1.1085,
US Dollar,,New Zealand Dollar,1.2045 ,
Canadian Dollar,,US Dollar ,0.9022 ,
Pound Sterling,,US Dollar,1.6713 ,
Euro,,US Dollar,1.3758,
Australian Dollar,,US Dollar,0.9032,
New Zealand Dollar,,US Dollar,0.8331 ,
[/table]
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