GBP/USD continues the bullish path on Monday. Currently, one British pound buys 1.3135 US dollars, up 0.46% as of 3:25 PM UTC.
The sterling managed to bounce back to the same levels ahead of the UK election. The British currency accelerated its growth after trade association UK Finance said that the number of mortgages accepted by local banks increased in November to the highest level in about three years.
The updated report showed that British banks approved 43,715 mortgages last month, up from 41,312 in October. This is the highest reading since January 2017.
Elsewhere, consumer credit rose at an annual pace of 4% in November, which is the smallest growth in seven months.
Separately, the US National Association of Realtors said earlier today that contracts to purchase previously owned homes increased last month. The pending home sales index rose 1.2% to 108.5, slightly better than what analysts had expected. Compared to November 2018, pending sales rose 7.4%.
Pending home sales are regarded as an early indicator that reveals the state of the housing market.
Nevertheless, the better-than-expected performance in pending home contracts hasn’t helped the USD to regain dominance against the British pound. GBP/USD has been moving in an uptrend since last Monday, as investors shifted their focus from no-deal Brexit fears amid the Christmas holiday.
After securing a historic win in the UK election, Prime Minister Boris Johnson promised to rule out any attempt to extend the Brexit transition deadline beyond December 2020, which he did on December 20 when the parliament passed the second reading of the Withdrawal Agreement Bill (WAB). However, European leaders believe that the 11-month period after the official Brexit date is not sufficient to reach the complex trade deal. If Johnson fails to reach an agreement with the bloc by the end of December next year, then we might see a no-deal withdrawal, which is the worst-case scenario for the British economy.
Officials and investors hope that the PM will give up his tight timeline. European trade commissioner Phil Hogan told The Irish Times:
“In the past, we saw the way the prime minister promised to die in the ditch rather than extend the deadline for Brexit, only for him to do just that. I don’t believe prime minister Johnson will die in the ditch over the timeline for the future relationship either.”
