Pound V euro: GBP exchange rate rally short lived as UK mortgage approvals plummet
AFTER sliding half a cent against the euro yesterday, the pound slipped against the common currency this morning as UK mortgage approvals fell more than expected last month.
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GBP/EUR is currently trading in the region of €1.122.
Sterling sentiment tumbled this morning as data published by the British Bankers Association (BBA) showed that banks only approved 40,488 home loans in October, down from 41,576 the previous month.
This was well below the more modest decline to 40,900 that was expected and was the lowest level of mortgage approvals since September last year.
However, accompanying data showed a significant surge in re-mortgages as homeowners sought to take advantage of the rates on offer ahead of a widely predicted interest rate hike from the Bank of England (BoE) earlier this month.
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Further weakening the appeal of the pound this morning was a slump in credit card lending growth last month, another indication that UK consumers are reigning in spending and becoming increasingly cautious about Britain’s economic situation.
Meanwhile the euro has strengthened this morning following the release of Germany’s latest business confidence survey.
According to figures compiled by the Ifo Institute for Economic Research in Munich, domestic business confidence surged again this month, with the sentiment index jumping from 116.8 to 117.5 in November, beating expectations it would slip to 116.6 and reaching its highest levels on record.
The continued uptrend in confidence this month is yet another sign that the Eurozone is set for a stellar year of growth in 2017.
Ifo chief Clemens Fuest said: “Sentiment among German businesses is very strong.
“This was due to far more optimistic business expectations.
“The German economy is on track for a boom.”
Looking ahead, the GBP/EUR exchange rate could still rally again by the end of the week’s session depending on how well Theresa May’s visit to Brussels goes later today.
While the focus of her visit will be a European session on the security of Eastern Europe amid alleged threats from Russia, she is also expected to meet with European Council President Donald Tusk to discuss Brexit.
Investors are hopeful that the meeting will lead to some positive progress in talks, which currently appear to be stalled over the issue of the UK’s divorce bill.
If the issue with the bill is not resolved it could lead to delays to the beginning of trade talks next month.
