GBP/USD: Pound Rally Continues as Gilts Drop and on Dragonfly Doji Formation
MarketPulse | Aug 18, 2023 01:48AM ET
- UK 10-year government bond yield surges to a 15-year high
- US 10-year real yields approach 14-year high
- Dollar was also lower on rebounding yen and yuan
The British pound is still rallying from the latest inflation that suggests sticky core inflation will keep the BOE in tightening mode. With the global bond market selloff being the dominant theme on Wall Street, traders are noticing Gilt yields are standing out. With FX traders pricing in three more rate hikes by the BOE, it seems that could be the trigger to allow the pound to continue its rebound. Today’s benchmark United Kingdom 10-Year bond yield rose 7.7 bps to 4.716%, the highest levels since August 2008. If we see a further vicious cycle here with Gilt yields, this will suggest BOE rate hike wagers are not cooling.
Source: Bloomberg
The GBP/USD daily chart is displaying a Dragonfly doji pattern has identified a bullish reversal that is currently respecting the 50-day SMA. Price action is also tentatively breaking above the downward sloping trendline that has been in place since mid-July. If bullishness remains intact, further upside could target the 1.2825 level, followed by the 1.2920 region. The psychological 1.30 level could remain an elusive target as expectations remain for the US economy to outperform most advanced economies.
Original Post
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.