British Pound Sterling climbs on a problem it has worse
Sterling holds just above 1.3600 into the North American afternoon, marginally lower on the day and inside a range of barely 35 pips, having printed a five-month high short of 1.3700 late last week.
The British Pound Sterling is currently trading just above 1.3600, slightly lower than its daily high of 1.3700. This move has added roughly four cents to the currency since early August, despite little to no economic data from the United Kingdom to justify the increase. The Bank of England (BoE) has not made any decisions since July, with the next decision expected on September 17.
The government has announced plans to double its long-dated buyback operations from September 9, and the US dollar has been on the back foot, down roughly 2.5% over the past month. The correlation between rising yields and falling dollar has unsettled currency desks, as reserve currencies are not supposed to behave in such a manner.
Britain's ten-year gilt yields are above 5%, significantly higher than the American paper being sold, and have remained at this level all month. The domestic data does not support the bullish case for the pound, as July inflation accelerated to 2.9% YoY, and unemployment remains at 4.9%. The autumn budget on October 28 has not been priced in yet.
The daily Stochastic Relative Strength Index (Stoch RSI) is above 93, which is a warning rather than a signal, and the breakout may end if the pound closes below 1.3550, with the 50-day Exponential Moving Average (EMA) near 1.3450 as the next genuine magnet.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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