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GBP/USD Reverses Course as Yields Extend Surge

GBP
  • GBP/USD completely reversed course to touch session lows and erase the entirety of the day's inflation-inspired gains. Currency move follows the run higher in UK yields at the Gilt open around 20 minutes ago, with the UK curve notably flatter as short-end rates surge.
  • Recall this is similar price action to the Truss budget market fallout from Autumn last year - where rallying BoE rate expectations and surging UK yields were accompanied by currency weakness (GBP/USD bottomed out back then at 1.0350).
  • Better volumes noted across currency futures since the European open, with ~1,300 contracts trading inside a minute at 0820BST - cash equivalent of just over $100mln. This tilts daily GBP futures volumes to over double what you'd expect to see at this point of an average session.

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