Mortgage lending increased by GBP7.2 billion, better than the market expectations of 6.9 billion pounds, as UK housing market continues to grow. UK housing market continued to show resiliency despite the high interest rates. Industry report showed that housing prices rose by 0.5 percent in February, following a 0.4 gain in January, posting the strongest gain since November.
The Bank of England may raise rates this year if consumer spending remains strong and housing market continues to exhibit pricing bubble conditions.
The British pound was quoted at 1.9211-16 against the dollar, .6876-79 versus the euro and 200.48-57 against the Japanese yen at 13:00 GMT.
London stocks moved higher as traders disregarded weakness in the retail sector following lower earnings guidance by the pharmacy chain.
The FTSE 100 rose 0.2 percent to 4,980.9 while mid-cap FTSE 250 added just over three points at 7,267.2.
The retail sector came under pressure after the Boots, the high-end pharmacy chain, lost 4.3 percent to 635p as the company lowered its full year earnings guidance. Other companies declined following the negative announcement. Marks and Spencer shed 0.2 percent to 349.75p, Next fell 1 percent to GBP165.26, Dixons dropped 1.2 percent to 158.5p. JJB Sports declined 0.5 percent to 207.5p. Woolworths slumped 1.6 percent at 47.25p.
British American Tobacco up 2.3 percent to 976.5p, as the stock lifted the sector higher, after the company reported better than expected quarterly earnings. Gallaher Group rose 1.3 percent to 795p and Imperial Tobacco edged 0.2 percent higher to GBP13.91.
Hays, the support services group, fell 2 percent to 131.5p after the company's profit growth stagnated during the previous quarter.
UK gilts headed lower following strong UK housing and consumer spending data releases. Traders pushed the bonds lower and yields higher on speculation that the Bank of England maybe "pre-emptive" in their interest rate increases as the UK economy continues to gather momentum. The 10 Year UK Gilt fell .43 to 99.81 pushing the yields up by 5 basis points to 4.77 percent. The Long Gilt futures contract for June delivery lost .46 to 109.25.
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