Sterling dips on global bond yields
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Daily Currency Update
Sterling has taken a dip this morning. News that long-term borrowing costs in the UK reached their highest level since 1998 amidst concerns over the country economic outlook and a global move higher in bond yields have weighed on the Pound. UK borrowing costs are among the highest in the G7 due to the UK’s persistent inflation and rising public debt. This is ahead of chancellor Rachel Reeves Autumn budget. It seems that market participants are buying the USD as an alternative investment on the news.GBP/USD has dropped from 1.3550 down to 1.3400 and EUR/USD sits below 1.1650 after touching 1.1730 overnight. Sterling is the loser in the EUR cross, dipping to 1.1500 before bouncing back up to 1.1520.
Key Movers
After the North American bank holiday yesterday (Labour day), the US resumes macroeconomic data today. ISM manufacturing PMI data is due at 3pm with an uptick from the previous 48.0 is expected, but a below expansion figure of 49.0 is expected. European data has already been released, showing month-on-month yearly inflation in the Eurozone was flat, but rose 0.1% on the forecast.Despite the lack of data, a return back to work for many will likely drive volatility. Trump is also due to speak at the White House at 7pm on a broad range of subjects. Market participants will be looking for clues on interest rate changes and the latest tariff increases.
Expected Ranges
- GBP/USD: 1.3320 - 1.3480 ▼
- GBP/EUR: 1.1490 - 1.1560 ▼
- GBP/AUD: 2.0480 - 2.0690 ▼
- EUR/USD: 1.1590 - 1.1710 ▼