The British Pound had a decent start to the week, even if its performance against the US Dollar gives a much-exaggerated picture of its overall strength. GBP/USD opened around 1.4135 and, along with most other currencies, rose steadily and without interruption through the day. By lunchtime in New York, the pair had reached a best level around 1.4245; its highest since the day of the US non-farm payroll figures back on February 2nd. The seven-tenths of a percent increase for GBP/USD compares with 0.5% for GBP/CAD and 0.3% for GBP/AUD, whilst GBP/EUR and GBP/NZD were little changed on the day. The overnight session in Asia has been very quiet indeed: just 15 pips separated the high and low of GBP/USD and no currency pair is more than 0.2% away from last night’s close.
Latest figures show that mortgage approvals fell 11% m/m in February to 38,120, well below consensus expectations for around 39k. UK Finance who compile the data said more home-owners were seeking remortgaging deals ahead of expected further interest rate rises by the Bank of England later this year. “We are also seeing a continuing rise in credit card spending, reflecting the growing number of transactions carried out using cards, while other forms of borrowing such as overdrafts continue to fall.” Net credit card lending amounted to 309 million pounds last month, down slightly from a net increase of 325 million pounds in January. As for house prices, Hometrack today reports price growth in London has hit a seven-year low with prices falling in almost half of all London postcodes, while the market in cities further north is “powering ahead”. The average price of a home in London is £487,900. Edinburgh is enjoying the fastest growth at 8 per cent in the year to February to £277,300. This is followed by 7.8 per cent in Liverpool to £115,700 and 7.7 per cent in Birmingham to £155,600.
On Brexit, a new report from credit ratings agency Moody’s says the UK-EU agreement “provides clarity that is credit positive for a broad range of UK issuers because it extends the narrow time frame that is available to shape and implement a new trade agreement and regulatory regimes with the EU until existing common rules cease to apply. It also buys the UK limited time to negotiate free trade agreements (FTAs) with other countries. However, the agreement remains conditional on the UK and the EU overcoming other challenges, such as the need to find a solution that prevents the creation of a hard border between Ireland and Northern Ireland. Until a conclusive final agreement is reached, uncertainty over the terms of the UK’s future long-term relationship with the EU will persist, weighing on the operating environment for UK issuers and hampering corporate investment.” GBP/USD opens in Europe this morning in the low-1.42’s with GBP/EUR in the mid-1.14’s.