Sterling pushed a little higher yesterday as mortgage approvals defied current trends, showing an increase. The British Bankers’ Association published number indicated a pick up from the 19-month low that we saw in August. The figure bucks the trend and highlights the demand for property despite the down turn in the economy. However, question marks remain as to how sustainable this will be with uncertainty over the manner of the UK’s exit from the European trading block and the rising cost of living.
Today is an important day as we have the first release of the nation’s growth data for the third quarter of 2016. The headline figure is expected to slide from 0.7% to 0.3% which will highlight the effect of Brexit on the overall economy. Should the figure miss expectations we could see sterling weakness and possibly test the psychological level of 1.200 against the US dollar. This will generate pressure on the BoE to review its policy tools so as to try and drive growth, and on the government to resolve the issues around Article 50 smoothly and repair confidence.