A sharp jump in US bond yields has strengthened the dollar and put heavy pressure on the British pound. On Monday the GBP/USD pair slipped to 1.3464, a two-month low, before recovering slightly to trade around 1.3492. The pound closed the day down 0.23%.
Yield Surge Reshapes the Outlook
After last week's US inflation data, the 10-year Treasury yield pierced 5% for the first time since 2003. The Dollar Index (DXY) rose 0.39% to 99.47. Markets now price a 93% chance that the Federal Reserve will raise rates at its September 16 meeting from 3.50-3.75% to 3.75-4%, with only a 7% probability of a hold, according to Prime Terminal.
Bank of England Expected to Stand Pat
In contrast, the Bank of England is widely expected to keep its Bank Rate at 3.75% at its September 17 meeting. Last week's GDP figures showed the UK economy grew 0.3% in July, beating most forecasts. The widening interest-rate differential favors the dollar and keeps the pound under pressure. Since peaking near 1.3568 last week, the pair has fallen more than 0.56%.
Upcoming Data and Events
This week brings UK jobs data on September 15, followed by the US ADP employment change four-week average and the FOMC policy decision on September 16. These releases will determine the next move for both currencies. In oil markets, Houthi attacks on Saudi Arabia forced the shutdown of the East-West pipeline (capacity 7 million barrels per day), pushing crude prices higher and adding to inflation worries.
Technical Analysis: Key Levels
On the daily chart GBP/USD sits at 1.3492. The pair holds above the triple simple moving average at 1.3481 and a short-term rising trend line near 1.3472, suggesting a mildly bullish near-term bias while price stays above this cluster. The RSI (14) around 45 keeps momentum neutral. Initial support lies at 1.3492, then the SMA triple at 1.3481 and the trend line at 1.3472, with deeper support at 1.3461 and 1.3353. On the upside, the next significant hurdle is resistance near 1.3688; a daily close above that level would be needed to extend the broader advance.
Other Major Market Moves
In the Asian session AUD/USD touched a one-and-a-half-week low near 0.7140, down about 0.25% for the day. USD/JPY climbed toward 154.00 but remained within the past week's range. Gold challenged the key $4,300 per troy ounce level but stayed on the back foot due to dollar strength and rising yields. Bitcoin traded near $77,884, with Ethereum holding support at $2,521 and Ripple at $1.38.
