The British pound’s consolidation over the past few days ultimately led to a sharp sell-off of the currency as UK traders returned to the markets. Indeed, GBP/USD plunged over 100 points over the course of two hours, and the release of BBA mortgage approvals did little to revive the pair.
While mortgage approvals rose to 38,704 in April from 35,546 in March - the lowest since record keeping began in September 1997 - this level was still nearly 40 percent lower than a year earlier. It is rather clear that tighter lending standards and weakening consumer confidence are taking a toll on the UK housing sector, which will only add pressure to already-plummeting property prices. Nevertheless, consumer price growth is - and will likely remain - very strong in the UK, as evidenced by recent CPI figures, which will probably prevent the Bank of England from cutting rates aggressively.