FX Focus: Pound remains in retreat mode over dismal mortgage data

The pound slipped against major currency crosses for a third successive session on Thursday (29 September) after the Bank of England said mortgage approvals were at their lowest level since November 2014.

At 4.19pm BST, the pound was changing hands versus the dollar and euro at $1.2974 and €1.1557, down 0.35% and 0.47% respectively. Earlier in the session, the British central bank said mortgage approvals for house purchases came in at 60,058 in August, down from 60,925 in July, pointing to a slowdown of the housing market in the wake of the UK's vote to leave the European Union on 23 June.

According to the latest BoE forecasts, monthly mortgage approvals are expected to fall to 56,000 in the second half of 2016; the lowest on record since the first quarter of 2013.

Analysts at Sucden Financial said Bank of England Deputy Governor Minouche Shafik's statement overnight – that in her opinion a further monetary easing would probably be needed given the size of the economic shock from the EU referendum vote – was still being taken in by the market.

"Shafik also stated that the forward-looking data had been better than expected and that forthcoming policy moves would be dependent on incoming data. Meanwhile, markets remain wary of potential month-end euro demand that could undermine the UK currency."

Understandably, the euro registered an uptick against the dollar as well, notching up a 0.25% gain to change hands at $1.1245. Meanwhile, commodity currencies surged on the news Opec was willing to consider a production freeze with the Canadian dollar and Norwegian krone benefiting the most, before retreating as the oil price slid again.

At 4:39pm BST, the dollar was up 0.81% versus the yen changing hands at JPY101.51 as risk appetite pushed the Japanese currency lower against all of its major peers, with retail sales dropping by 1.1% in month over month terms in August.

FXTM chief market strategist Hussein Sayed said data showed Japanese consumers are still reluctant to spend with retail sales dropping for the sixth straight month; the longest streak since the global financial crisis. "This is just another indication that Bank of Japan's stimulus policy is not doing enough to send Japanese consumers into shopping malls."