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Source: Newsmaker.id
The pound sterling weakened again against the US dollar during Thursday's trading (Oct 8), extending a period of pressure for the second consecutive day. The GBP/USD pair traded around 1.3210 during the Asian session, as the US dollar remained strong, bolstered by high US government bond yields approaching levels not seen since 2002.
Dollar strength was also supported by rising inflation concerns following a renewed surge in oil prices. Rising energy costs reinforced the view that price pressures could persist, potentially allowing the Federal Reserve to maintain a tight monetary policy.
Minutes from the Fed's latest meeting revealed that policymakers agreed to the interest rate hike in September. Most officials also assessed that further increases before year-end would likely be necessary. Although the market anticipates rates will remain unchanged at the October meeting, the probability of a hike in December stands at approximately 78.3%.
Market participants are now awaiting statements from Fed officials—including Christopher Waller and Alberto Musalem—for further clues regarding the direction of monetary policy. A return to a hawkish tone could strengthen the dollar and exert continued pressure on the GBP/USD pair.
In the UK, rising oil prices have also heightened concerns regarding domestic inflation. This situation reinforces expectations that UK interest rates will remain high for longer, while pushing yields on UK government bonds (gilts) to multi-year highs.
However, high borrowing costs have also raised concerns about the UK's economic growth outlook. The combination of a strong US dollar, high Treasury yields, and domestic economic pressures means the pound sterling continues to face hurdles in achieving a near-term recovery.
Source: Newsmaker.id