GBP/USD higher after UK mortgage approvals, gains limited

British pound moved higher against the US dollar on Monday, following the UK mortgage approvals report, but, however, gains seemed limited as wariness dominated market players decisions ahead of the meetings by the European Central Bank and the Federal Reserve.

GBP/USD hit the highest point during the current session at 1.5412 at 8:41 GMT, after which consolidation followed at 1.5390. Support for the pair was likely to be found at July 24th low, 1.5290, while resistance was to be met at June 25th high, 1.5478.

Earlier on Monday Bank of England reported that Net Lending Secured on Dwellings rose at the fastest pace in the past year in June, implying that the recent increase in house prices may continue during the upcoming months. The value of this indicator rose by 0.981 billion GBP in the month of June, or the largest rate of increase since April 2012. In May Net Lending Secured on Dwellings recorded a 0.5 billion GBP increase, a revision up from 0.3 billion GBP previously. The number of mortgage approvals showed a slight decrease in June to 57 667, compared to 58 071 during the preceding month. Preliminary estimates pointed an increase to 59 700. Policymakers in the country expressed their concerns that the insignificant of the complete lack of lending towards the small business segment may prove to remain one of the most serious problems in front of the economy, as measures in that direction were to be taken.

Investors preferred to use caution, making their decision how to position in the market, focusing on Bank of Englands policy statement in search for clues regarding its easing program. Last week it was reported that UK Gross Domestic Product grew in line with projections during the second quarter of the year.

In the mean time, a series of mixed data was released from the United States during the last week. The Labor Department in the country stated on Thursday that initial jobless claims rose by 7 000 to reach 343 000 during the week ended on July 20th 2013. Results during the preceding week were revised up to 336 000 from 334 000 previously. On the other hand, on Friday the University of Michigan reported that US consumer confidence index rose to a six-year high in July, advancing to a reading of 85.1 from 83.9 in June, exceeding preliminary estimates of a value of 84.0. All this fueled uncertainty over the future of FED’s stimulus program.

Elsewhere, the sterling traded steadily against the euro, as EUR/GBP cross ticked up 0.02% to 0.8634 at 11:31 GMT. The pound was lower against the Japanese yen, as GBP/JPY decreased by 0.36% to 150.55 at 11:33 GMT.

The dollar index, which tracks the performance of the US dollar against a basket of six other major currencies, erased 0.26% to 81.585.