Cable’s topside was capped ahead of Monday’s 1.6496 highs, which led to consolidation below the 1.6400 handle. The pair traded from 1.6465 highs in Asia and recorded a 1.6355 low in Europe on mooted quasi-official selling. They pushed it to the session lows and are currently capping prices just above the 1.6400 handle, according to European sources. One other potential negative today is news that Barclay’s largest Middle Eastern investor, Abu Dhabi’s IPIC has announced plans to offload its long term strategic stake to focus on hydro carbon activities. This could lead to some GBP selling pressure ahead, although the elevated levels of risk appetite should mean that Cable will be able to cope with this level of order flow hitting the market as speculative names and real money look to buy the dip. Elsewhere, EUR/GBP maintains a heavy tone just in front of 0.8600 and GBP/JPY is close to 158.00 after it found support at 157.50 in early trade. The cross is still a modest distance from Monday’s 159.17 peak, however. U.K. data today has indicated more improvement.
U.K. mortgage approvals were 43.2k in April, according to the BoE, up from 40.0k in March (revised from 39.0k) and above the market median forecast of 41k. Net mortgage lending rose to GBP0.97 bln, in line with the Reuters 1.00 bln median and up from 0.64 bln in March (revised from 0.76 bln). Overall, lending figures suggests that activity in the mortgage market remains slow, but that the situation now is stabilizing. Moreover, the May construction PMI jumped to 45.9 from 38.1, reaching its highest reading since April 2008, indicating that the bottom is likely to have been reached for the hard-hit construction industry as well – just as for services and manufacturers – which is a very encouraging sign indeed, given how construction activity is a good indicator of general optimism and demand in the economy.
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