Sterling Sinks Six Sessions Straight as US Dollar Surges

The British Pound Sterling has experienced its sixth consecutive losing session against the US Dollar without any significant domestic news or events contributing to its decline. The GBP/USD pair traded near 1.3300, having set a high just short of 1.3400 in the early hours and subsequently grinding lower throughout the day. This move is attributed entirely to the strengthening US Dollar, which is being driven by factors unrelated to Britain.

The absence of domestic headlines behind Sterling's decline is the more significant fact about this session rather than its 0.45% loss. The intraday sequence reveals that there was no domestic trigger for the decline, as the high near 1.3400 was set before London's market reaction time, and the pair continued to fall throughout the European morning despite an empty UK calendar.

The US Dollar is being driven by several factors, including reports of a threatened attack on Iran, which has pushed Brent crude oil prices above $101, lifting the US Dollar Index by around 0.3% towards 101.50. Additionally, the sharp drop in initial jobless claims to 187K, against a consensus of 212K and prior reading of 209K, has contributed to a tighter American labour market inside an energy shock, increasing the likelihood of a hike.

The US Federal Reserve is being priced for tightening, with odds of at least one increase reaching 80.6% by mid-September, 86.6% by late October, and 92.2% by December. The Bank of England is also being repriced in the same direction, with traders positioned for two quarter-point increases by March after the oil rebound revived the hawkish case that Wednesday's cooler inflation print had softened.