Dollar Sell-Off Lifts GBP/USD Despite Weaker Wage Growth

The GBP/USD exchange rate is up by 0.26% on Thursday at 1.3641, reaching levels last seen in the spring after a strong move to 1.3610 the previous day.

This gain is largely attributed to the dollar's story rather than sterling's own performance, with the US Treasury increasing the size of liquidity support buyback operations for longer-dated nominal coupon securities by at least double, lifting the per-operation ceiling from $2 billion to at least $4 billion effective September 9 through November 4.

The move has led to a fall in ten and thirty-year yields, easing financial conditions, and causing the dollar index to break to an eleven-week low near 98.70. The EUR/USD exchange rate reached 1.1711, while GBP/USD cleared 1.36.

Despite this move, sterling's own inputs were neutral at best, with UK headline CPI rising to 2.9% in July from 2.6% in June, matching forecasts, while core inflation held unchanged at 2.6%. The pound showed almost no reaction to the news.