The pound fell against the greenback yesterday despite the release of better than anticipated UK mortgage approval data. The reaffirmation of a hawkish stance by the Fed continues to keep the greenback bullish against its rivals, including the pound. Overall, the GBP/USD pair fell from 1.1760 to a low of 1.1621 in the past 24 hours.
According to the data published by the Bank of England, the UK’s mortgage approvals rose to 63,770 in July, from 63,184 in June, and surpassed forecasts for 61,725 approvals. The reported figure is lower than the pre-pandemic average (12 months ending February 2020) of 66,800.
Additionally, approvals for remortgaging rose to 48,400 in July, from 43,400 in June. The figure is below the pre-pandemic average (12 months ending February 2020) of 49,500. On a net basis, an additional £1.4 billion was borrowed by consumers. This includes £0.70 billion in fresh lending on credit cards.
Small and medium-sized firms repaid loans to the tune of £0.30 billion in July. This is lower than the £1.40 billion repaid in June, and represents the 16th successive month of net repayments. Notably, large non-financial enterprises settled £1.80 billion of bank loans in July, compared with £1.40 billion of borrowing in June.
The Job Openings and Labor Turnover Survey (JOLTS) data published by the Bureau of Labor Statistics indicates that US job openings inched slightly higher to 11.24 million in July, from 11.04 million in June, and delighted economists who were expecting a drop in the openings to 10.37 million.
Also, the rate of job openings stood almost unaltered at 6.90%. Job openings in the transportation, warehousing, and utility sector increased by 81,000 in July. Arts, entertainment, and recreation posted a rise of 53,000. Additionally, the federal government and state and local government education recorded growth of 47,000 and 42,000, respectively. Durable goods manufacturing recorded a drop in job openings by 47,000.
Furthermore, the number of hires remained almost unaltered at 6.40 million. Also, the pace of hires stood unchanged at 4.20%. According to the US Conference Board, the country’s consumer confidence index increased to 103.20 in August, from 95.30 in the prior month, and was greater than the reading of 97.60 forecast by economists.
Notably, the reported figure reflects the first increase after three successive monthly declines. The present situation index inched up to 145.40 in August, from 139.70. Likewise, the expectations index rose to 75.10, from 65.60.
According to the Federal Housing Finance Agency, the housing price index grew by 0.10% m-o-m in June, following a rise of 1.30% in the prior month, but missed the 0.80% growth anticipated by economists.
US prices surged 17.70% q-o-q in 2Q22. On a sequential basis, housing prices grew by 4% in the June 2022 quarter.
Despite the better-than-anticipated economic data, the pound is expected to remain slightly bearish against the greenback in the short term as the reaffirmation of the hawkish stance by the Fed continues to keep the demand for the US dollar high.
The historical price chart indicates that the GBP/USD pair is declining after facing resistance at 1.1900. The next support is anticipated only near 1.1475. Additionally, the currency pair is trading below its 50-day moving average while the stochastic indicator is in the bearish zone. Therefore, we are anticipating the currency pair to remain in a downtrend for the next few trading sessions.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
