Despite a brief run this morning Sterling slipped against the dollar with GBP/USD exchange rates falling to a low of $1.7003. The day had started positively for the pound with cable sitting just below $1.7050 but any gains were short-lived as market players started to trim bets amid speculation the Bank of England could tighten lending rules to dampen the UK housing market.
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With growing concerns that the UK house prices are rising to quickly, there have been calls for the Bank of England to intervene. By implementing tougher mortgage criteria the BoE will be hoping fewer people will be in a position to get on the housing ladder which in turn will stop house prices rising out of control.
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The pound has been on the march over the past couple of weeks, gaining nearly 2% against the dollar following Mark Carneys speech two weeks ago. It seems the only thing that could cause the pound to start falling against the dollar would be a Bank of England intervention as the UK economy has been out performing its U.S counterpart.
As I have said before, if the mid-market price can hold above $1.70 then the pound will be in a strong position to keep on climbing. Later this week we get the final Q1 GDP reading for the UK and there have been reports we could see a revised figure from 0.8% up to 0.9%, if that were to happen the pound is likely to gain some momentum and it is possible we could see another fresh high for GBP/USD.
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