The pound struggled for direction on Tuesday (30 August), after data released by the Bank of England earlier in the day showed mortgage approvals fell to an 18-month low last month.

By mid-afternoon sterling was broadly unchanged against the dollar at $1.3112, after trading as low as 0.17% down against the greenback earlier in the session, and was 0.21% higher against the euro to €1.1734.

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According to the BoE, the number of mortgage approvals fell from 64,152 in June to 60,912 last month, falling short of analysts' expectations of 62,000. By comparison, the first quarter of 2016 total of 216,575 had been the highest quarter for mortgage approvals for house purchases since the fourth quarter of 2007.

"With Brexit uncertainty having driven new buyer enquiries lower in recent months, we suspect that mortgage approvals have further to fall over the rest of the year," said Scott Bowman, UK economist at Capital Economics.

Elsewhere, the dollar gained ground amid rising expectations that the Federal Reserve might hike interest rates as early as September following Janet Yellen's speech at Jackson Hole on Friday. The Federal Reserve chair explained that the US economy is improving and suggested the case for a move on rates had strengthened in recent months.

The greenback was up 0.26% against the euro to 0.8958 cents and rose 0.46% against the yen to ¥102.39.

"The most important data which is standing between the Fed and another rate hike is the upcoming US non-farm payroll numbers which is due this coming Friday," said Naeem Aslam, chief market analyst at Think Markets UK.

"Market participants will be paying attention to this number and the odds of a September meeting being a live one have already strengthened substantially. We believe there is over an 80% chance that the Fed will increase the interest rate one more time this year."

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