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GBP/USD Hit by Volatility as US Bond Yields Surge, Brexit Optimism Breaks Out

Last week’s high: $1.3076

Last week’s low: $1.2926

US Dollar Volatile as Bond Yields Soar and Employment Data Mixed

The Pound US Dollar exchange rate fluctuated last week, in the face of soaring US treasury yields and renewed Brexit optimism.

The first half of the session was marked by an upswing in the US Dollar as demand for the US currency shot higher despite a selloff in the bond market that caused US 10-year bond yields to strike their highest levels since 2011, following a strong US services PMI and hawkish remarks from the Fed.

Sterling sentiment rebounded in the second half of the week however as optimism in Brexit was reignited by reports that Ireland would back Theresa May’s new plans for an all-UK customs union with the EU.

Ultimately the pairing closed the week almost unmoved from its opening rate as the Pound’s rally on Friday cancelled out a mid-week dip despite US labour figures revealing domestic unemployment had fallen to its lowest levels since 1969.

USD Outlook: Brexit to Dominate GBP Sentiment as Deadline Draws Near?

Looking to the week ahead, Brexit is likely to remain centre stage throughout the session as we rapidly approach the next EU summit on the 18th – seen as an informal deadline for the UK to reach an agreement with the EU.

We could see some notable volatility in GBP exchange rates through the week, depending on whether there is some positive progress in negotiations.

Meanwhile the focus for USD investors this week will be on the latest US CPI figures, with another upswing in inflation likely to push the US Dollar higher as it bolsters Federal Reserve rate expectations.


Key Events

9th October

15:00 US Fed Evans Speech

10th October

02:15 US Fed Williams Speech

09:30 UK Trade Balance (Aug)

09:30 UK GDP (Aug)

09:30 UK Industrial Production (Aug)

10:00 UK BoE Haldane Speech

13:30 US PPI (Sep)

11th October

13:30 US Inflation Rate (Sep)

12th October

15:00 US Michigan Consumer Sentiment (Oct)


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To keep up to date with the US Dollar, visit the USD blog in our Currency News section.

Arron Morris
Currency Trader
T: 01442 892 065

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