Release Explanation: The index, comprised by the Bank of England, measures the number of mortgage approved for the purchase and refinance of homes throughout the United Kingdom. A higher number of mortgage approvals signal an increase in growth from all areas of the economy. The U.K. is heavily dependent in its financial sector for jobs and tax revenue, and a healthy increase in mortgages is indicative of stronger banking needs.
Trade Desk Thoughts: Net lending to individuals fell again in January. The number came in at only £1.1B, much lower than analysts’ expectations. The number released for the month of December was also revised lower, to £2.1B. At the same time, the report showed that the number of loans approved for home purchase remain steady in January, at 31K.
In January, the lending report returned to its downward trend, even though the December numbers were much stronger than expected. To some extent, it is still unsure if the strong rate cuts made by the BoE have affected the U.K. financial system in any way. January’s numbers were a record low in the history of the report.
Forex Technical Reaction: The pound dropped 100 pips in the first minutes of the Asian session. However, since then the pound has struggled to break below the 1.4200 support level.