The Euro Pound (EUR GBP) exchange rate fell from an eight-year high this morning and the combined impact of investors seeking to profits from the low exchange rate and an uptick in UK mortgage approvals bolstered Sterling.
Pound (GBP) Rallies as Mortgage Approvals Surge
Sterling was able to build on last night’s recovery this morning as the UK’s latest home loan figures beat expectations.
According to data released by the Bank of England (BoE) mortgage approvals surged from 65,318 to 68,689 in July, easily outpacing the 65,500 that had been forecast and reaching a new sixteen-month high.
While the data appeared to impress investors this morning, analysts have continued to warn that Britain’s housing market is likely to weaken over the next couple of years as consumers are expected come under additional economic pressure due to Brexit and the apparent slowing in the UK economy.
Euro (EUR) Strengthened as Eurozone Confidence Surges to 10-Year High
Meanwhile the Euro found some strength this morning with the release of the Eurozone’s latest Economic Confidence figures.
According to data published by the European Commission, economic sentiment jumped in August, with its confidence index leaping from 111.3 to 111.9, beating expectations that it would remain flat and reaching a new ten-year high.
Bert Colijn economist at ING Bank said;
‘The August survey indicators all point to some modest improvements compared to July, but the main message is that the economy maintains a healthy cruising speed. Economic growth in the Eurozone seems to be stable at around 2% year-on-year for the moment, well above trend growth. The Economic Sentiment Indicator showed improvements in both services and industry, showing the current economic strength is widespread.’
With the European Central Bank (ECB) set to meet next week for its latest monetary policy meeting, markets are hopeful that the increasingly upbeat outlook across the Eurozone will prompt the bank to begin discussing its plans to start tempering its stimulus programme.
EUR GBP Forecast: Trump Tax Speech to Overshadow US GDP?
Looking ahead the EUR GBP exchange rate may rally again later today with the release of Germany’s latest CPI data as economists forecast that inflation in Europe’s largest economy will have risen from 1.7% to 1.8% in August.
Meanwhile the Pound may stumble on Thursday as GfK publishes its latest household sentiment data for the UK, with the Consumer Confidence index expected to have slipped from -12 to -13 in August as rapidly rising inflation and weak wages growth continues to pressure household finances.
Current Interbank Exchange Rates
At the time of writing the EUR GBP exchange rate was trending around 1.1949 and the GBP EUR exchange rate was trending around 0.8366.