Sterling Holds Steady Amid US Treasury's Soft-Dollar Signaling

The sterling held steady on Friday as the US Treasury's unscheduled bond buyback operation continued to support a soft-dollar, risk-friendly trading environment. The GBP/USD traded up 0.32% at 1.3672.

ING's Global Head of Markets Chris Turner noted that many commentators are over-interpreting the move, saying it was primarily a signalling exercise to address higher longer-dated Treasury yields. He drew a distinction from April 2025's Liberation Day episode, when policy credibility fears drove safe-haven flows into the franc, euro and yen.

The US data calendar on Friday centers on the August S&P PMI readings, with all components expected to show continued expansion. The broader Fed repricing story, softer inflation and labour data that have weakened the case for additional tightening, remains intact. Existing long-dollar positions could be unwound if rate hikes are fully removed from market pricing.