GBP: sterling hits a 10-week high against the euro before falling back

Sterling began the day by hitting a 10-week high against the euro following the continuing concern over the result of the German election. However, comments from a former BoE MPC member had the effect of softening sterling slightly. Blanchflower’s suggestion that increasing UK interest rates in the near future would be a mistake dampened the recent confidence in the pound, albeit only slightly. As a result, the euro managed to claw back some of its early losses.

In other news, UK consumer credit slowed last month according to new data from UK Finance. Borrowing from High Street banks dipped to 1.5% in August from 1.9% in July, in a sign that consumers are saving less as opposed to borrowing more. UK mortgage approvals for August were higher than the monthly average over the past six months.

Today we have the release of housing prices data from Nationwide, but the markets will be looking to Friday, when the UK growth rate and consumer confidence are released. The chart below shows sterling movements against the euro over the last month.