Forex - Sterling Hits 7-Month Lows on Household Debt, Brexit Concerns
Investing.com - The pound fell to seven-month lows Thursday as Bank of England Deputy Governor Jon Cunliffe’s warning about household debt levels and concerns over Brexit weighed.
GBP/USD was down 0.26% to 1.3080 by 04:48 AM ET (08:48 AM GMT), the weakest level since November 6.
Sterling came under pressure after Cunliffe said in a radio interview that he was worried that British households with high debt levels could be vulnerable in a recession.
"(Household debt is) quite high by historical standards but (households have) worked hard to put those debt levels down. But within that there are areas that you do worry about," Cunliffe said.
He also reiterated the central bank's guidance that interest rates are likely to rise in a gradual and limited fashion.
Expectations for a rate hike in the coming months were hit earlier in the week after incoming BoE policymaker Jonathan Haskel said there may be more slack than thought in the UK economy, which would weaken the case for rate hikes.
He added that the central bank has scope to cut rates slightly in case of an economic downturn
Meanwhile, concerns over Brexit also weighed after Irish PM Irish leader Leo Varadkar said overnight that the lack of progress in talks was “disappointing”.
The euro rose to the highest levels in three weeks against the pound with EUR/GBPhitting 0.8838 before pulling back slightly to 0.8827.