Forex News – UK mortgage approvals are up but Sterling is falling

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UK mortgage approvals are up and at the highest level since mid-2010. British Bankers’ Association data shows approvals for June at 31,747 compared to 30,803. What boosted mortgage applications was the fact that consumers pushed back expectations for the Bank of England to increase interest rates, the BBA said, and they rushed to take advantage of the record low interest rates .

However, despite approvals being higher they remain at very low levels and consistent with a UK housing market which is still meandering nowhere special. This is just like the picture of the UK economy

and the net result is that both the economy and housing market remain prone to downside risks as the weight of lower consumer spending and fiscal austerity lead to cautiousness.

The Pound was little affected by the news, though edging up slightly against the Dollar from 1.6287 to 1.6280 within 30 minutes of the data release at 08:30 GMT.

Earlier in the Asian trading session, Sterling hit a five-week high against the Dollar political wrangling over whether to raise the U.S. debt ceiling by the August 2 deadline to avoid a debt default and possible credit rating downgrade continued to drag on the greenback.

However, the Pound’s gain are seen to be limited as UK GDP data are due Tuesday with potential for a poor reading. Preliminary GDP numbers for the second quarter are expected to fall to 0.2% from 0.5%, and this already weighing on market sentiment.

Since the open of the European session, GBPUSD has dropped down to a low of 1.6260. Sterling has also weakened against the euro, with EURGBP rising to a high of 0.8834 from a low of 0.8834 so far in the European session.