GBP/USD hits the strongest level since May 2011 on BBA data, Mark Carney’s comments

The pound traded little changed against the US dollar, after hitting the strongest level since May 2011 as a report by the British Bankers Association (BBA) showed UK mortgage approvals increased to a six-year high in December.

Having hit a 2-1/2-year high at 1.6668 at 08:10 GMT, GBP/USD traded little changed at 1.6629 at 10:27 GMT, losing 0.05% for the day. Support was likely to be received at January 23rd low, 1.6555, while resistance was to be encountered at May 2nd 2011 high, 1.6739.

The pound drew support after a report by the British Bankers Association (BBA) revealed that the number of approved mortgages in the UK increased to 46 521 in December from Novembers 45 044, short of analysts projections of an advance to 47 300 approved mortgages. However, the number of loans approved for home purchases climbed to the highest since 2007.

Bank of England Governor Mark Carney told in a BBC interview yesterday, cited by Bloomberg, that: “There are a broad range of things we could do, I wouldn’t jump to that conclusion,” referring to a question about decreasing the threshold of 7% unemployment rate that was linked to monetary policy. He also added: “It is a decision of the entire Monetary Policy Committee.”

Mark Carneys comments came after data revealed the nation’s unemployment fell more-than-projected, reaching 7.1% in the three months to November, just above the 7% threshold that the Monetary Policy Committee (MPC) pledged to use as a benchmark for raising the record-low benchmark interest rate. According to the UK Office for National Statistics, this was the largest decline in unemployment since 1997 and the lowest level since May 2009.

According to BoE’s minutes from its January meeting released on Wednesday, the unemployment may hit the central bank’s 7% threshold “materially earlier” than estimated. However, the minutes also revealed that policy makers didn’t feel pressured to take immediate actions for raising interest rates, if the threshold is reached too soon. Yesterday, Mark Carney also reiterated that the MPC didnt need to take immediate actions for raising interest rates.

Meanwhile, demand for the US dollar continued to be underpinned by a recent string of overall optimistic reports, which boosted the view of further cuts in Federal Reserve’s monetary stimulus.

The Bureau of Labor Statistics reported on Thursday that the number of initial jobless claims in the United States rose by 1 000 to 326 000 in the week ended January 18th, from a revised down number of 325 000 during the previous week. Analysts had expected that the people who filed for unemployment assistance will increase to 330 000.

A separate report said that existing home sales in the country increased 1.0% to the annualized 4.87 million units in December, following a three-month streak of declines. According to data by the National Association of Realtors (NAR), existing home sales reached a seven-year high in December 2013 compared to December 2012. During the whole 2013 sales increased to 5.09 million units, or a 9.1% gain in comparison to the whole 2012. Experts had anticipated that existing home sales will reach the annualized 4.93 million units in December. November’s result has been revised down to 4.82 million from 4.90 million previously.

The average home price in the country was 198 000 USD in December 2013, or a 9.9% increase in comparison with the same month a year ago, which came as a result of weaker supply.

Elsewhere, AUD/USD plunged to a daily low at 0.8690 at 5:20 GMT, also the pair’s lowest point since July 20th 2010, after which consolidation followed at 0.8704, falling 0.73% for the day. Support was likely to be found at July 20th 2010 low, 0.8684, while resistance was to be met at January 23rd high, 0.8845.