UK household credit growth hit the slowest pace of the year so far according to data published by the Bank of England (BoE).
Credit rose £1.17 billion to hit £201.5 billion – lower than market expectations of a £1.5 billion increase after June’s figure was revised down to £1.35 billion.
Lending on credit cards eased back to 8.9 per cent from June’s 9 per cent, while other loans grew 10.3 per cent after a 10.6 per cent increase previously.
Debt relative to household income continues to rise back towards the pre-financial crisis high, with the ratio currently at 145 per cent.
The Bank of England recently raised concerns over the level of household indebtedness in the UK, which has seen the consumer credit figures garnering more market focus in the subsequent months.
Signs of a slowdown in credit growth are therefore being viewed more positively than it otherwise would, with slowing consumer appetite for borrowing failing to undermine the pound.
Mortgage approvals, on the other hand, strengthened to a 16-month high of 68,689, helping to allay fears that the property sector is weakening.
Octane Capital’s Jonathan Samuels said: “It’s by no means firing on all cylinders, but equally the property market has not fallen flat on its face.
“Transaction levels are down and the market has without doubt cooled, but there is still demand.”
Eurozone business and consumer sentiment may have picked up above or against forecast, but the approach of German inflation data later today is keeping the euro on muted form.
The business confidence index has improved from 1.04 to 1.09 against forecasts of a smaller rise to 1.06, while services sentiment beat predictions of a fall to 13.9 to instead climb to 14.9.
Consumer confidence rose from -1.7 to -1.5 as expected, although the consumer inflation index has eased back slightly from 11.7 to 11.6.
Economic sentiment in the Eurozone is now at a ten-year high after the index defied projections of a hold at 111.3 to climb to 111.9.
Markets are now awaiting German consumer price index figures, which are forecast to show an acceleration of year-on-year price growth from 1.7 per cent to 1.8 per cent.
Month-on-month inflation is expected to slow from 0.4 per cent to 0.1 per cent, which will dampen the odds that the European Central Bank (ECB) will make hawkish adjustments to its vast quantitative easing programme.
GBP/EUR could therefore have further to appreciate later in the session, despite a lack of any additional UK data on the economic calendar today.