The British pound outperformed both the US dollar and Euro today despite mixed economic data.
Even though net mortgage lending increased to 9.8 billion from 8.5 billion last month, the drop in mortgage approvals to a 26 year low indicates that this increase is not a reflection of a stronger housing market but instead a reflection of higher credit costs. It is becoming more expensive to service these loans, which is why the amount of credit outstanding has increased even though mortgage approvals and house prices have both decreased. Inflationary pressures according to M4, the UK’s broadest measure of money supply remained unchanged. The Bank of England’s dour outlook leads us to believe that UK interest rates will be left untouched until the beginning of the New Year.