Pound sterling hits 27-month high on light trade
Pound sterling strengthened its position against the US dollar, as market participants took advantage of an idle greenback in a day of light trading. The pound soared to a 27-month high against its North American rival, as economic data continued to support its meteoric climb.
UK home prices rose at an annualized rate of 6.5 percent in November and mortgage approvals hit a six-year high in October, according to separate reports from Nationwide and the Bank of England. In total, 67,701 home loans worth £10.5 billion were issued in October, the highest level since February 2008. Some market participants believe the BOE’s intervention in the mortgage market has created a ticking debt time bomb. Net lending to individuals increased by £1.7 trillion in October, adding further credence to concerned investors.
The negatives were outweighed by bullish sentiment, with pound sterling gaining another 33 pips to 1.6370 US in North America. The currency pair advanced more than 7.7 percent since June, making pound sterling the best performing developed nation currency of the past six months.
“Sterling is one of the currencies that can perform relatively well against a generally weak dollar and also in the European context if you look at the short-term data,” said Paul Robson of Royal Bank of Scotland Plc. Day to day volatility likely won’t harm the pound’s bullish streak over the next couple of months, Robson would later add.
Sterling continued to perform well against its European counterpart, the euro, edging up 28 pips. The EURGBP fell beneath the 0.83 handle in North American trade, despite upbeat inflation data from the euro region. The consumer price index rose 0.9 percent in November, easing pressure on the European Central Bank. The ECB has been mulling over negative deposit rates for several weeks in an attempt to combat deflation.
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