Greenspan hints on higher rates (page 3 of 3)

The British Bankers' Association said underlying mortgage lending rose in June by 6.5 billion pounds, a sharp pickup from 5.1 billion in May. That was the highest monthly figure since comparable records began in 1997. Separately, public finance data showed government spending pushed Britain's public borrowing up more than expected in June.

The Office for National Statistics said that the pubic sector net cash requirement (PSNCR) stood at 10.62 billion pounds in June, around half a billion pounds up on a year ago. Analysts had expected a PSNCR of 9.0 billion pounds.

Sterling continued its free fall against the U.S. dollar after an upbeat assessment of the U.S. economy from Alan Greenspan. Furthermore, Bank of England minutes showed the Monetary Policy Committee had voted 9-0 to leave interest rates steady at the early July meeting. Even positive UK retail sales data failed to lift the pound.

British retail sales surged in June at their strongest pace in six months and at almost three times the rate expected, as the Euro 2004 tournament boosted TV and sportswear purchases. The greenback's dominance across the board even overshadowed upbeat UK growth data.

UK second quarter growth data came in as analysts had forecast at a robust 0.9 percent on the quarter, disappointing last minute speculation of even stronger number. Second quarter growth outstripped first quarter growth of 0.7 percent and scored its highest year-on-year rate since the third quarter of 2000 at 3.7 percent.

Range for the week: $1.8150 - $1.8450