GBP/USD kicked by jobs data
The pound has dropped to its lowest level versus the US dollar since September 2013 as the greenback continues to gain ground on the back of the US jobs report on Friday. Adding to the pound’s woes, the Bank of England has issued its final quarterly bulletin for this year and the report highlights the risks posed to mortgage holders should UK interest rates rise. The UK central bank estimated the number of mortgage holders that would fall into arrears could increase by one third if interest rates were to rise to 2.5%. The BoE predicts that wage growth will increase and that should cushion any increase in the base rate.
Traders are not expecting any change in the UK interest rate until well into next year, and this will keep the pound under pressure. Sterling has been sliding since the high of £1.7179 reached in July and the downward trend remains intact.
$1.56 is now acting as resistance for the GBP/USD as it previously acted as support. $1.55 is the new target for the bears.