We're seeing another fresh round of bids in the dollar as Treasury yields continue to pull higher on the day. 10-year yields are up nearly 10 bps to 4.32% and that is keeping the greenback underpinned. It's another one of those buy dollar, sell everything else days as we go back to the familiar narrative with key central bank meetings in the works over the next two weeks.
GBP/USD in particular is down over 1.3% to 1.1081 at the moment as the downside pressure intensifies on a break below its key hourly moving averages as noted earlier here. This now puts the 1.1000 level in focus again as well as the 12 October low at 1.0923.
Considering the fact that the pound itself is short of any confidence amid a rather bleak UK outlook, it's tough to fight the prevailing narrative. This was something I mentioned at the start of the week:
"As the UK gilts crisis dies down, the focus for the currency turns towards the economic outlook and BOE outlook again. As for politics, Truss is facing daunting odds to stay in charge as prime minister. In a bizarre twist, the latest YouGov Tory members poll show that Boris Johnson is the top choice to replace Truss. I mean, what else can you say to that.
"Going back to the chart, cable is now being pressured close to the 100-hour moving average (red line) and a fall below that will see the near-term bias turn more neutral instead. The 1.1200 mark and the 200-hour moving average (blue line) will be the next area to watch for support and a further drop will exacerbate any further decline towards 1.1000 again.
"Outside of politics, the pound is also struggling for comfort as the BOE came out to deny that it was going to delay QT - which is scheduled for 31 October. That's not offering too much assurance for gilts as well, which are still at elevated levels even though newly appointed UK finance minister, Jeremy Hunt, ripped up the mini-budget yesterday.
"On the balance of things, it's still tough to look at the pound with much confidence and the daily chart also points to some technical resistance via a trendline from the recent highs. That suggests that the technicals are also supporting a consideration for limited relief in the latest bounce for the pound, adding to the already bleak fundamental outlook."