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Higher Treasury Yields as GBP Struggles




  • Sterling Losing Ground Against Dollar
  • Treasury Yields Higher as USD Advances
  • Risk Rally on Wall Street Continues

The middle of the week in the forex market has seen a return to regular order with the Dollar improving again against the backdrop of other major currencies continuing to struggle. The Treasury yields in the US have also continued to tick up, a move that typically hints at an ongoing cautious environment. On the other side of the Atlantic, the Pound is not finding any traction with political instability running rife there. On Wall Street, however, there have been gains. These look set to continue into Wednesday’s trading session. 

Political Turmoil Weighs on Pound

Those forex trading the GBP have still not found any positive ground. Any forward momentum has been quickly brought back as ongoing political issues with the new leadership harm any favorable moves from the currency. At the time of writing, the GBP/USD pair was trading below 1.13 and remaining under pressure with little opportunity to get out of its current situation owing to a number of factors. 

These include the fact that the Dollar is trading at almost record strength day after day and there is now an extremely strong possibility of a 75 basis point rate increase in November to combat inflation. The key issue though for the GBP is the fact that the leadership of the country is in disarray. New PM Truss is under heavy pressure having already walked back a number of key economic proposals. There looks to be little daylight for the currency at present.

Yields Move Higher in the US

Forex brokers in the US have also seen a further increasing demand from traders to be in the safe haven US Dollar as Treasury yields again pushed higher toward new records. The US 1-year is currently sitting at close to or above 4% which is the highest point it has seen this week. 

The move higher in these numbers has come off the back of more hawkish commentary from the Federal Reserve. It now appears almost certain that interest rates will see a bumper increase at the November FOMC meeting. This jump is expected to be 75 bps as the country alongside the rest of the world, continues to struggle with bringing rampant inflation in line. Figures from the EU show inflation of more than 10% for the 12 months to September.  

Wall Street Still Positive Despite Data

Numbers on Wall Street turned in what had been largely positive early market trading. The futures market is now pointing in a downward direction but markets are coming off a positive start to the week which may yet extend through Wednesday.

Earlier in the week, the major indices had gained well with the Dow Jones adding another 300 points on Tuesday and the S&P 500 also gaining more than 1%. This comes amid a closely watched earnings period though many say these positive moves are simply bear market bounces.

Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.