The continuing rise in US short-term yields and speculation about a 75 bps Fed hike have helped lift the US dollar across the board. The pound has borne the brunt of the damage.
After holding the 1.20 level twice today, it's finally broken in a fall to 1.1994. That's the lowest since March 2020, when it briefly fell to 1.14. Excluding the pandemic, there was also a brief fall to 1.1957 during the 2019 Brexit drama and again in 2016 after the Brexit vote. Aside from that, you need to go back to 1985 to see these kinds of levels.
The particular weakness in the pound today is tough to square. Today's UK jobs data was strong. The worry is that the UK economy will be dragged down by high energy costs and weak growth throughout Europe. That could be compounded by austerity from the UK Conservative government.
