Pound Falls on Mortgage Approval Report

Submitted by Samuel Kariuki on Thu, 28/06/2012 - 12:21
in

The Great Britain pound fell against all of its 16 major traded counterparts after a report showed that the UK mortgage approvals dipped to the lowest since a year ago. Most economists have said that this sets the ground for the Bank of England to resume stimulus measures. The Bank of England Governor Mervyn King admitted that he voted for more easing this month due to the continuing debt crisis in Europe which has resulted to deteriorating global economic outlook. After the Mortgage Approval data was released, speculation quantitative easing would be done emerged forcing the pound to decline.

According to Peter kensella, who is a Senior Currency Strategist in London at Commerzbank AG, indicated that the quantitative easing decision may be made in the coming July meeting. He also predicted that the pound will continue to decline in the coming weeks. According to the British Bankers’ Association Mortgage Approval report, the number of loans given to buy homes dropped by 5.8 percent which is the sharpest drop since April last year. The report also showed that repayment of mortgage was more than it was given. After BOE Governor’s bid to expand the stimulus package was defeated, Nomura Holdings Inc provided a forecast showing that the BOE may expand the plan by 75 billion next month to reach 400 billion.

In the past month, the pound decreased by 1.5 percent making it one of the worst performers among the G10 countries. After the report was released, the sterling pound fell by 0.6 percent against the dollar to trade at $1.5554 at the close of London session yesterday. The UK currency also fell by 0.3 percent against the euro to trade at 80.12 pence per euro; it had earlier appreciated to 79.85 pence. The current decline against the greenback has pushed the pound to 2.8 percent quarterly decline.

 

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