Score another one for the pound! It followed up its gains on Monday with another awesome performance as GBP/USD climbed 106 pips to finish the day just above the 1.5600 handle. Can the pound make it three in a row today?
It seems that traders couldn’t get enough of the pound after the U.K. published a few upbeat reports, the first of which was the U.K. Nationwide HPI. Despite the fact that the outlook for the economy has deteriorated in recent weeks, house prices were surprisingly resilient this month as the index showed a 0.4% increase instead of a 0.1% decline as many had anticipated.
This figure, which translates to a 1.6% increase year-on-year, is a pretty decent follow-up to last month’s 0.4% increase. Good news, right? Well, not entirely. Housing experts say that the rise in prices was brought about by a lack of supply rather than a strong demand.
Net lending to individuals also picked up nicely in October as lending increased by 1.3 billion GBP. Thanks in part to a big jump in the number of loan approvals for house purchases, actual net lending to individuals was able to outperform expectations by 300 million GBP.
In other news, the Office for Budget Responsibility (OBR) declared that the government is still on track to meet its financial targets for the year. But on the downside, it sees domestic demand weakening in the near future. It’s for this reason that the OBR downgraded its growth forecasts. It revised its 2011 forecast down from 1.7% to 0.9%, while cutting its 2012 forecast from 2.5% to just 0.7%. With such a bleak outlook for the economy, it’s no wonder that many market junkies are expecting more quantitative easing in February 2012!
Just a few hours ago, we got a look at the most recent GfK consumer confidence data. Though it remained in negative territory, it did show a slight improvement from the previous month’s reading of -32. The index printed a reading of -31 for the month of November, beating forecasts by two whole points.
But so far, this hasn’t done much to reignite demand for the pound. Then again, it’s still quite early in the day. Keep watching those charts, fellas!