The British pound had a hard time yesterday. On the one hand, the number of approved applications for mortgages increased from 61,692 to 67,478, which probably looks impressive. Nevertheless, the volume of consumer loans issued amounted to 1.4 billion pounds against 1.6 billion pounds in the previous month. The business activity index in the manufacturing sector declined from 55.3 to 55.2, however, the results are better than expected. In any case, the number of approved applications does not mean the actual issuance of a loan, which will result in the purchase of housing, but the reduction in lending is already a fait accompli. Naturally, the pound on this background began to get cheaper.
However, the pound was supported by American statistics. Personal income grew by 0.4%, and expenses by 0.2%. Revenues grew stronger than forecasts, and this is not the first month in a row. This indicates a decrease in consumer activity, while stocks also grow. This is repleted with a decline in production, as well as inflation, and the result can be a sharp increase in unemployment. Hence, the picture is not really optimistic. At the same time, the number of initial applications for unemployment benefits decreased from 220 thousand to 210 thousand. While the number of repeat applications increased from 1,874 thousand to 1,931 thousand. The growth of long-term unemployment is much more weighty since it indicates that the labor market has no more empty seats. Well, the business activity index in the manufacturing sector fell to 55.3, instead of growing from 55.5 to 55.9.There is further no news for today. The attention is focused only on the business activity index in the construction sector, with an expectation to grow from 50.2 to 50.5. Yesterday, the data on approved mortgage applications stimulate optimism indicating that the actual data will came in better than the forecasts. The real estate market is extremely important for the pound, as it is one of the main criteria for determining the investment attraction of the United Kingdom. The construction sector is directly connected with it, which means that its growth will allow the pound to make a new attempt to increase.
The pound / dollar pair may rise to 1.3825.
* The presented market analysis is informative and does not constitute a guide to the transaction.
