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The BoE caps mortgage lending

GBP/USD hit the new session highs after the release of the BoE Financial Stability Report and the Governor’s Carney speech. Mark Carney said the recovery in the UK economy is broadening and strengthening, but the property market poses significant risks to financial stability.

To mitigate them the UK regulator will cap mortgages from October, so that people borrowing 85% of a house's value will not be allowed to borrow more than 4.5 times their income. They also announced new stress tests for the banks.

Carney underlined that the monetary policy outlook remains unchanged: rate hikes are needed, but they will be gradual and moderate.

GBP/USD moved higher on Carney’s comments, but faced resistance around $1.7030.

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