GBP/USD Drops to Seven Week Low at 1.6870

The pound posted its biggest monthly decline against the dollar since May 2013 as signs of growth in the U.S. economy boosted expectations for higher Federal Reserve interest rates.

Sterling fell to a seven-week low versus the greenback as data showed U.K. consumer confidence dropped in July and house prices grew at the slowest pace since April 2013. Bank of England Deputy Governor Ben Broadbent said in an interview with Bloomberg News yesterday that the “edge is coming off” the housing market. The pound weakened for a fourth day against the euro, while U.K. government bonds fell as data added to evidence the U.S. labor market is strengthening.

“Both the U.K. housing and consumer confidence data releases were on the weaker side and I would expect further declines for pound-dollar,” said Neil Jones, head of hedge-fund sales at Mizuho Bank Ltd. in London. “The Broadbent comments catalyze the selling process. Investors who were looking to sell on a small blip will go to the market and sell on these comments. For me, it was a warning that rates should not be raised too quickly.”

Bloomberg

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