GBP Plunges to Lowest Since June as UK Bonds Sell Off

The British Pound (GBP) has continued its downward trend, falling to its lowest level since late June against the US Dollar. The GBP/USD pair is on track for a third consecutive weekly loss, trading below 1.3200. This decline comes as UK government bonds have sold off, with the 30-year gilt yield rising above 6% for the first time since 1998.

According to Bank of England external member Mann, the rise in gilt yields reflects investors' expectations of higher inflation and possibly a premium for uncertainty over BoE policy. Mann argued that the BoE needs to raise interest rates from their current level of 3.75% to maintain credibility, as markets already price in up to four increases by next summer.

The UK's Chancellor Healey is set to present his first budget later this month, which may further impact market expectations and the Pound's value. With US Nonfarm Payrolls data due on Friday, forecasted at 90K, a strong count could hit GBP/USD twice: through the Dollar and through gilts, which rose after US Treasury yields did.