Pound at 5-month low against US Dollar

The pound is currently headed for a third straight weekly decline against the greenback, as comments from the Bank of England undermine the UK currency.

Duncan Higgins, Senior Analyst at Caxton FX says: "It's all the more surprising that Cable is currently at its lowest point since May because the dollar has been comparatively weak recently. Positive economic data from around the world has supported a strong rise in risk appetite in the market, which has taken its toll on haven currencies.

"In particular, the higher-yielding Aussie and kiwi dollar has risen sharply and the Euro too has been trading at year highs. Demand for the pound however has been severely shaken in the wake of leading Bank of England officials announcing their support of a weak pound. Cable has fallen in value by 6.5%, from highs of near $1.70, in early August to current trading levels of below $1.59."

Later today, US non-farm payrolls data will be released, which is set to add further pressure to the struggling pound. A forecast survey earlier in the week predicted only a slight decrease in the number of people claiming unemployment benefits, and more recent speculation has suggested that the overall jobless rate in the US could rise to a 26-year high of 9.8%. Amid concern that the dollar is too weak at the moment, this data is likely to lead the pound even lower over the short term, with the price possibly heading down towards 1.57 next week.