GBP Plunges Below $1.32 as Oil Prices Soar and Yields Surge

The British Pound (GBP) hit three-month lows against the US Dollar (USD), falling below $1.32 on Wednesday, as a dismal market mood and surging US Treasury yields boosted the greenback.

A combination of factors contributed to the decline in GBP/USD, including Brent Oil prices rising above $100 and soft UK manufacturing activity data. The 10-year US Treasury yield climbed to its highest level in over 24 years at 5.30%, while the 30-year note hit a multi-decade high of 5.68%.

The Federal Reserve's (Fed) interest rates remained steady, with the 2-year yield holding around 4.90%. However, the Personal Consumption Expenditures (PCE) Price Index data revealed that inflationary pressures rose less than expected in September, prompting markets to dial down bets of another rate hike in October.

Analysts at Rabobank noted a marked deterioration in speculative positioning on the Pound, with GBP net shorts increasing by over 40% to their highest level since August. The S&P Global Purchasing Managers' Index (PMI) was revised lower to 51.9 in September, highlighting the weakest output growth in six months.