GBP/USD advanced on upbeat UK housing data, Carney statement

British pound received support against the US dollar on trading Friday, following a report to show that UK house prices increased at a faster rate than projected in September, while Bank of England (BoE) Governor Mark Carney said for a UK newspaper that he saw no case for further monetary stimulus.

GBP/USD soared to a session high at 1.6131 at 5:20 GMT, also the pairs highest point since September 19th, after which consolidation followed at 1.6064, gaining 0.14% for the day. Support was likely to be found at September 24th low, 1.5956, while resistance was to be met at September 19th high, 1.6146.

Today the Nationwide Building Society reported that house prices in the United Kingdom rose at the fastest pace in five years in September, which boosted, to a certain extent, concerns that a house sector bubble may be forming, despite that Bank of England claimed the opposite. The index of house prices in the country rose 0.9% in September on a monthly basis and 5.0% on annual basis. Prices of homes have not registered such a sharp annual advance since July 2010, when they surged 6.6%. These results surpassed expectations, as analysts had anticipated a monthly climb of 0.5% and an annual climb of 4.4%.

In addition, BoE Governor Mark Carney told the Yorkshire Post that the central bank would consider an increase in its Quantitative Easing, in case economic recovery fails. “This sits with the tone we’ve seen recently from the Bank of England, where there was an absence of very dovish rhetoric,” said Jane Foley, senior currency strategist at Rabobank International in London, cited by Bloomberg. “The message is that there may be further asset purchases should the recovery stall, but the data suggest that things are returning to normal. The market has quashed most of its hopes that there could be more QE”, as the sterling has been supported.

Meanwhile, the Senate of the United States plans to vote today on a spending bill, 3 days before federal spending authority runs out and a few weeks until the country reaches its borrowing limit. US President Barack Obama and congressional Republicans are deadlocked over the federal budget in a confrontation which could lead to a government shutdown within days. US Congress must reach an agreement on the budget matter before October 1st in order to prevent such a scenario, which could involve federal employees to face unpaid temporary leave or a delay of remuneration of military personnel.

Elsewhere, the sterling was higher against the euro, with EUR/GBP cross easing down 0.08% for the day to trade at 0.8404 at 9:16 GMT. GBP/JPY pair was down by 0.13% to trade at 158.61 at 9:17 GMT. The pound has appreciated 6.5% during the past six months, or demonstrating the best performance among the 10 developed-nation currencies, tracked by Bloomberg Correlation-Weighted Indexes. The US dollar has dropped 0.5%, while the euro has gained 5.7%.