RTTNews - During early European deals on Thursday, the British pound rose to a 1-month high against the Swiss franc as U.K. house prices enjoyed their strongest run of gains over the past three months, lifting hopes that the market may have found a bottom. The pound also jumped to a 4-week high against the European currency and a 2-day high versus the US dollar and the Japanese yen.
House prices in the U.K. rose 1.3% month-on-month in July after rising a revised 1% in the previous month, the latest report from the Nationwide Building Society showed today. Economists had forecast an increase of just 0.2%. House prices increased for the third straight month in July.
Compared to the previous year, prices fell 6.2% in July, slower than a 9.3% fall in June. But, economists had forecast a decline of 7.6%.
House prices have been remarkably resilient so far this year, despite a recessionary economic background with sharply rising unemployment, said Martin Gahbauer, chief economist at the Nationwide.
Gahbauer noted that even if prices were to remain unchanged for the rest of 2009, the year-on-year rate would continue to improve since prices were falling very sharply in the second half of last year.
The report adds to signs that the U.K. housing market may be starting to recover as the economy emerges from the worst recession in at least three decades. The Bank of England will decide next week whether to continue its program of buying bonds with newly created money.
Indicating that activity in the British housing market is likely to increase in the coming months, the number of mortgage approvals for house purchase rose to their highest level in more than a year in June, data released by the Bank of England showed yesterday.
The number of loans approved for house purchase totaled 47,584 in June, the highest since April 2008, larger than May's 44,169 and 47,000 expected by economists. Meanwhile, the number of loans approved for other purposes stood at 29,509, which was also higher than in May.
To kick-start activities in the housing sector, U.K.'s Housing Minister John Healey announced on Monday GBP 925 million funding for 270 stalled development projects across the country.
The British currency was also boosted by a rise in U.K. stock prices. Britain's top share index gained 0.5 percent in early deals on Thursday fueled by strength in miners and energy issues after results from Royal Dutch Shell, with investors digesting a slew of blue chip numbers.
By 4:54 am ET, the FTSE 100 .FTSE was 29.01 points firmer at 4,576.54 having closed 18.69 points or 0.4 percent higher on Wednesday, resuming its advance after snapping a two-week winning streak on Tuesday.
The index has gained over 31 percent since hitting a six-year low in March, but is still down 2.6 percent this year.
Against the European currency, the British pound edged higher to 0.8521 during early deals on Thursday. This set the highest point for the pound since July 3, 2009. The next upside target level for the British currency is seen around 0.848. The euro-pound pair closed Wednesday's North American session at 0.8580.
The British pound that touched a 5-day low of 0.8687 against the European currency on July 27 strengthened thereafter and has gained around 2% thus far.
In economic news from Europe, Germany's Federal Statistical Office announced that the ILO jobless rate stood at 7.7% in June, marking the same pace as in the previous month. A year earlier, the jobless rate was 7.3%.
The British currency climbed to a 2-day high of 1.6516 against the US dollar during today's early deals. The pound-dollar pair is currently trading at 1.6475 with 1.660 seen as the next target level. The pair closed yesterday's deals at 1.6382.
The pound has appreciated around 3% after hitting a 1-month low of 1.5986 against the dollar on July 8.
Against the Swiss franc, the sterling advanced to a 1-month high of 1.7959 during Thursday's early deals. On the upside, 1.804 is seen as the next target level for the British currency. The pound-franc pair closed Wednesday's New York deals at 1.7812.
The pound-franc pair that traded near a 5-week low of 1.7398 on July 13 has gained around 2.9% since then.
U.K.'s sterling traded higher against the Japanese yen during early deals on Thursday At 5:00 am ET, the pound-yen pair rose to a 2-day high of 156.94, compared to 155.62 hit late New York Wednesday. If the pair gains further, 157.6 is seen as the next target level.
Data released by the Ministry of Economy, Trade and Industry showed that Japan's industrial output rose a seasonally adjusted 2.4% month-on-month in June, after rising a revised 5.7% in the preceding month. Most economists expected a 2.5% rise in production.
Year-on-year, industrial output slipped an unadjusted 23.4%, slower than the 29.5% drop in May and also slower than the 23.6% fall expected by economists.
From the U.S., the weekly jobless claims report for the week ended July 25th has been scheduled for release in the upcoming North American session.
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