UK mortgage approvals rose for the fourth straight month in
September, possibly signalling the success of the BoE’s funding for lending
scheme. Home loans were up to 50,024 in September, beating expectations for
48,700, and higher than August’s revised 47,921 mortgages.
Net consumer credit was 1.2 billion Pounds in September, according
to the Bank of England. Earlier today, housing prices were reported to have
fallen 0.1% in the UK according to the Hometrack Housing
Survey.
As Spain is expected to contract for the fifth consecutive
quarter, the heightening threat for a prolonged recession will continue to
dampen the appeal of the Euro, and the European Central Bank might come under
additional pressure to expand monetary policy further as the governments
functioning under the single-currency become increasingly dependent on monetary
support.
The ECB may have little choice but to push the benchmark interest
rate further to a fresh record-low amid the weakening outlook for growth and
inflation, and we may see the Governing Council carry its easing cycle into the
following year as European policy makers struggle to stem the threat for
contagion. The EURUSD slipped as an 11% drop in Spanish retail sales dampened
the outlook for the euro-area, and the single currency may face additional
headwinds.
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