No rate hike this year
UK mortgage approvals dipped slightly below forecasts as homebuyers were uncertain as to whether the stamp duty holidays would continue beyond March, although the amount of mortgage lending rose to £6.2bn for the month, a 5 year high. Personal lending data showed a decrease to £1.25bn for the month as consumers continued to repay debts, and the annual decline rose to 9.9%, the sharpest decline since the series started in 1994. The Pound slid below 1.3800 against the Dollar but rose to yearly highs of 1.1765 against the Euro.
Gertan Vlieghe, a Bank of England Monetary Policy Committee (MPC) member, stated that rapid growth will be needed to consider tightening policy (raising rates) adding that a few quarters of good growth would not be enough. He added that any increase in inflation would not be enough this year to say that the economy does not require monetary support.
The Pound opens just below 1.3800 to the Dollar and 1.1710 to the Euro this morning.
The Dollar overall pushed higher yesterday and lifted the US Dollar Index, which tracks the US Dollar against a basket of other currencies, to new yearly highs in the area above 93.00 the figure.
Biden’s plan to boost the infrastructure adds to the recently passed $1.9 trillion fiscal stimulus bill, all morphing into further speculations of higher inflation in the coming months.
Later today in the US data space, FHFA’s House Price Index is due along with the S&P/Case-Shiller Index and the Conference Board’s Consumer Confidence gauge for the month of March.
In addition, FOMC’s R.Quarles, Atlanta Federal Reserve (Fed) R.Bostic and New York Fed J.Williams are all due to speak.
The Euro saw some fresh signs of life overnight against the Dollar, although the bearish bias remains intact.
There was also a minor relief following comments from the French Prime Minister Jean Castex, that there were no plans to change restrictions on shops and businesses at this stage. The Euro, however, was unable to make significant headway as underlying sentiment remained negative. Further expectations that the Euro-zone would substantially underperform relative to the US remained negative for the single currency as the Euro drifted lower.
As of writing, the Euro currently trades around the 1.1750 mark against its US counterpart.
Data to watch
15:00 – USD – CB Consumer Confidence