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After rising to $1.25004 during the first hour of the London session opening, the pound has been falling, leaving the currency pair trading in the low $1.24's at the time of writing.
GBP/USD graph.
What has caused the move?
At the moment is seems the result of the Bank of England's stress test and stability report has caused the pound to weaken.
During his stability report, Bank of England governor Mark Carney issued a warning over the current level of debts in Britain's households.
Carney stated that consumers were borrowing more than ever on unsecured debt and credit cards, with credit card lending hitting an all-time high, while unsecured debt is rising at its fastest level for eleven years.
The report also showed the overall household debt to income ratio had risen to 133% during the second quarter of this year.
Bad news for RBS
As I have already mentioned the result of Bank of England's stress test also seems to have impacted the value of the pound this morning. The tests are in place to ensure that UK banks have enough capital in place to cope with a global recession and a house price crash.
The BoE confirmed this morning that RBS failed its test, while Barclays and Standard Chartered also
missed some key requirements.
As a result RBS have been forced to find a way of increasing its balance sheet by two billion pounds, which is likely to come from cost cutting and selling assets.
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