The pound continued to rally yesterday and is now poised to snap a three-month decline versus the euro, as the UK showed positive economic signals.
- Data from the Bank of England revealed that UK net consumer lending rose less than expected in September but the number of loans approved for house purchases did hit its highest level in 18- months.
- Mortgage approvals rose to 56,215 from a revised 52,970 in August, which is the highest level of approvals since February last year and marks a solid recovery from September 2008 when only 33,419 mortgages were approved.
- The more positive data saw traders trimming excessive short positions in the pound, enabling the UK currency to briefly extend gains over 1.12, and suggesting that the markets may have overreacted to the surprisingly weak GDP data last week.
- Analysts noted that the UK currency also benefited as the euro fought to stem its broad slide this week, as traders saw the slump in global equities earlier in the week as a sign to sell the single currency.