By TraderVox.com
Tradervox.com (Dublin) – The sterling pound increased towards one-year high against the greenback after UK industry report showed that mortgage approval increased last month. Speculation is high that the UK economy is improving hence pushing the pound high against the dollar, euro and yen. The UK currency increased against the Japanese currency as draft guidelines for the European Stability Mechanism showed that the European Central Bank will invest in several assets. Speculations that the debt crisis will affect the UK economy have declined significantly.
Jeremy Stretch, a London-based Foreign-Exchange Strategist at the Canadian Imperial Bank of Commerce, noted that the pound rose as sentiment improved regarding the European Stability Mechanism’s ability to invest is a wide range of assets. He also noted that the UK housing data contributed to the strengthening pound as it was marginally better than the previous readings. According to British Bankers Association report, mortgage approvals in UK increased to 30,533 in August, registering the largest amount of mortgage approvals since April. The figure rose from 28,750 registered in July. Further, signals of UK economy improvement came from the Office of National Statistics report, which showed that the budget deficit ex-government support for banks was at 14.4 billion pounds lower than the market expectation of 15 billion pounds.
The Bank of England said that the financial institutions in the country may be able to borrow an initial amount of 61 billion pound through its new Funding for Lending Scheme. Under this scheme, the BOE intends to avail funds to households and companies as a way to fend off contagion from the debt-stricken euro zone.
The UK currency appreciated by 0.2 percent against the US dollar to exchange at $1.6241 at the close of trading session in London yesterday. The currency had climbed to a high of $1.6309 on September 21, which is the highest level since August 31, last year. The pound rose to 79.37 pence against the euro, its strongest since September 7, before retreating to 79.76.
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