Pound Boosted as U.K. Mortgage Approvals Reach Post-Brexit High

  • Sterling only major currency to rise versus dollar this month
  • U.K. data “continues to surprise to the upside”: Mizuho

The pound rose amid mounting evidence the U.K. economy is weathering the fallout from Brexit better than analysts expected.

Sterling climbed for the first time in three days against the euro as a report showed mortgage approvals reached the highest since March last month, indicating the housing market remains robust following the June vote to leave the European Union. The better-than-expected data are helping to counteract currency traders’ longer-term concerns over the nature of Britain’s exit from the bloc.

“U.K. data on net continues to surprise to the upside,” said Neil Jones, head of hedge-fund sales at Mizuho Bank Ltd. in London. Sterling was “catalyzed via the consumer and mortgage data this morning” although “it may not last if the U.K. moves to a brutal Brexit.”

Sterling rose 0.5 percent to $1.2480 as of 11:26 a.m. in London. It was 0.6 percent stronger at 84.99 pence per euro.

While the pound is the only major currency to outperform the dollar this month, it is still down 16 percent since the June referendum. The U.K. economy is forecast to slow in 2017, with household incomes coming under pressure thanks to sterling’s fall.

Separate data Tuesday showed non-resident investors bought a net 10.5 billion pounds of U.K. gilts in October, even as that month saw a selloff that pushed up 10-year yields by the most since January 2009.

That followed a 13.3 billion-pound inflow in September, with the “two large months of consecutive buying” a “sign of healthy overseas demand,” according to Simon Peck, a fixed-income strategist in London at Royal Bank of Scotland Group Plc. For John Wraith, head of U.K. rate strategy at UBS Group AG in London, the buying suggests that “for more active investors, there is a view being taken that the fall in the pound over the past year represents an opportunity to buy gilts more cheaply.”

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