The pound is currently at around $1.345 against the US dollar, up 0.4 per cent from this morning’s starting levels of around $1.339.
The US dollar was driven lower in overnight trade on Wednesday following a drop in US ten-year bond yields in response to a fall in US consumer confidence in December.
US consumer optimism stumbled this month, with the latest US confidence index sliding from 128.6 to 122.1, falling well below a more modest decline to 128 which had been forecast by economists.
The decline was largely attributed to a more pessimistic outlook for both business and job prospects over the next couple of months.
The fall in bond-yields further dragged on the dollar index – a measurement of the US dollar against a basket of other currencies – which has fallen roughly -9 per cent in 2017, with the currency currently on track for it largest annual slide since 2003.
This is a major reversal from 2016, where the US dollar ended the year on a high on optimism over Donald Trump’s first term as President.
Meanwhile the pound was forced to relinquish some of its gains this morning as the British Bankers’ Association (BBA) published its latest mortgage figures.
According to the data compiled by the BBA, mortgage approvals slumped to 39,507 in November, while October’s approval numbers were revised down from 40,488 to 40,417.
However, despite the dip analysts remained relatively upbeat as it suggests that more flexible credit options helped to increase mortgage activity in 2017.
Eric Leenders, Managing Director of Commercial and Personal Finance said: “Today’s data reflects a continuing trend that we have seen throughout 2017: ongoing activity in the mortgage market and a shift towards more flexible and affordable personal credit options.”
Looking ahead the GBP/USD exchange rate may retreat later this afternoon with the release of the latest US goods trade balance, with economists forecasting that the goods deficit will have fallen from -$68.3bn to -$67.7bn in November.
At the same time the pound is likely to struggle over the next couple of days as a lull in domestic data and thin trading volumes over the holiday period leave Sterling a little directionless.
However, looking to next week the pound may be lifted should the UK’s latest PMI figures impress as some analysts predict.