Sterling Surges to Six-Month High Against Dollar Amid US Treasury Intervention

The British pound has reached its highest level against the US dollar in six months after the US Treasury announced it would double the size of buybacks of longer-dated Treasury securities.

The move sent the 30-year yield sharply lower, capping long-term yields and making the dollar less attractive to investors. As a result, the pound rose to $1.3661 against the dollar, its highest level since February 16.

Analysts say the US Treasury's decision is bearish news for the dollar, as it signals an effort to cap long-term yields and stabilize borrowing costs. Louis-Vincent Gave, CEO at Gavekal Research, said 'A U.S. Treasury actively signalling that it is looking to cap long-term yields is bearish news for the U.S. dollar.'

The pound has also been supported by still-elevated inflation in the UK, which has investors pricing in higher borrowing costs from the Bank of England. However, some analysts predict a potential weakening of the pound against the euro as the Bank of England may keep interest rates on hold this year.