GBP/USD Hits Two-Week Lows as Global Bond-Market Volatility Spikes
The Pound to Dollar exchange rate (GBP/USD) has declined to near two-week lows of around 1.3530 as global bond-market volatility unsettled risk appetite and pushed UK borrowing costs to their highest levels since 2008.
A renewed sell-off in global bonds dominated the first day of September, with the UK 10-year yield jumping to nearly 5.20% - its highest level since 2008 - and US yields spiking higher.
Despite Scotiabank's positive outlook on the Pound, which sees near-term support at 1.3500 and resistance above 1.3600, markets are pricing in just over a 60% chance of a September Fed rate hike, leaving uncertainty surrounding central bank policy decisions.
MUFG noted that 'USD debasement' concerns will continue to curtail dollar buying enthusiasm, while Commerzbank FX analyst Michael Pfister stated that the Bank of England is uncertain how transitory the price shock will be.