GBP/USD briefly traded above 1.25 overnight, the third time this month

GBP/USD has dropped further this morning with prolonged dollar strength continuing to be seen in financial markets. GBP/USD slipped below 1.21 overnight for the first time since March 2023 as investors continue to worry about US interest rates needing to be held at current levels well into 2024. The latest monthly survey from the British Retail Consortium has added some extra downward pressure to the pounds value with it showing the first monthly drop in supermarket prices in over two years. With food bills making up a large chunk of consumer spending, this will add weight to the argument that the Bank of England will no longer need to raise interest rates and will (like the US Federal Reserve) hold them at current levels into 2024. GBP/USD is currently around 1.2070. GBP/EUR is a touch lower at 1.1525.

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