GBP Brushes off Weaker Retail Sales and Mortgage Approvals Data

*GBP Brushes off Weaker Retail Sales and Mortgage Approvals Data*
In the UK, we saw mortgage approvals decline to a 21-month low of 40K
in November.

Via Bloomberg: UK Mortgage Approvals Decline to 21-Month Low as
Housing Market Weakens
"U.K. mortgage approvals fell to the lowest level since March 2009
last month as the housing market weakened amid the prospect of the
government's fiscal squeeze.

The number of home loans fell to 40,000 from 45,000 in November, the
Bank of England said today in London, based on data from six banks.
The value of loans fell to 8.9 billion pounds ($14.2 billion), with
net lending dropping to 800 million pounds, the lowest since records
began in January 2009.

Recent data have shown a mixed picture of the U.K. housing market as
the prospect of the biggest government budget squeeze since World War
II and tight lending conditions hurt demand. Mortgage approvals are at
less than half the level seen at the peak of the market in 2007."

The UK economy is about to begin its austerity measures and unlike in
Germany and the Euro-zone, the view seems less optimistic about what
is in store for the UK. Retail sales fell 0.8% for the month of
December, expectations had a smaller decline of -0.2%. Retrenchment by
consumers will be a headwind for growth.

With inflation higher, the BOE will not be able t provide stimulus,
and may in fact have to think about raising interest rates, which is
why the GBP had been stronger of late. However, the prospect of higher
interest rates during a low-growth environment will only work to hurt
the GBP in the medium term. We can see in the EUR/GBP pair that its
the Euro that is driving the action the past two weeks.
Source: Fxstreet.com