Pound Steady Amid Fed Hike Expectations

The pound was steady on Friday as the UK GDP beat expectations, but investors were more focused on US inflation data that could confirm a Federal Reserve rate hike next week.

Dollar firmness is rebuilding its correlation with long-end Treasury yields, according to ING's Francesco Pesole, who said 'we continue to see upside potential for the dollar.'

A smaller-than-expected Treasury buyback and Treasury Secretary Scott Bessent's reluctance to fight the bond market have helped restore this link. Oil's roughly 15% rally since Gulf tensions flared and stalled yen strength are also contributing to a defensive rotation back into the dollar.