British Pound tests 1.3200 as higher US yields and risk-off markets boost US Dollar

GBP/USD reverses Wednesday's gains and hits fresh three-month lows at 1.3193 on Thursday.
UK S&P Global Manufacturing PMI has been revised lower, amid weak output growth.
The US Dollar outperforms its peers as long-term US Treasury yields hit fresh 24-year highs.

Guillermo Alcala FXStreet

The British Pound (GBP) heads lower against the US Dollar (USD) on Wednesday, with the GBP/USD pair hitting three-month lows just below 1.3200 ahead of the US session opening. A dismal market mood, with Brent Oil prices returning above $100 coupled with surging US Treasury yields, is buoying the US Dollar, while soft UK manufacturing activity data has failed to support the Pound.

US Treasury yields have crawled higher on Thursday, with the yield of the benchmark 10-year note hitting 24-year highs above 5.30% as the stalemate in the Middle East conflict keeps boosting energy prices and pushing global inflation higher.

The yield for the 30-year note hit another multi-decade high, at 5.68&, while the 2-year yield, closely related to Federal Reserve (Fed) interest rates, remains steady around 4.90% despite cooling hopes of a rate hike in October.

Soft US inflation data fails to dent US Dollar's rally

Personal Consumption Expenditures (PCE) Price Index data from the US released on Wednesday revealed that inflationary pressures rose less than expected in September, while August’s reading was revised lower. This prompted markets to dial down bets of another rate hike in October to a 37% chance, from nearly 70% one week ago, according to data by the CME’s FedWatch Tool.

In the UK, the final S&P Global Purchasing Managers’ Index, released earlier on Thursday, has been revised slightly lower, to a 51.9 reading in September, from preliminary estimations of 52.0. The report highlights the weakest output growth in the last six months, with orders and exports growing moderately but with demand slowing amid higher energy prices

Analysts at Rabobank point to a marked deterioration in speculative positioning on the Pound, noting that "GBP net shorts have also increased by more than 40% to their highest level since August." Rabobank adds that "GBP has weakened in line with the recent oil-driven USD rally," underscoring the negative speculative sentiment toward the Pound.

Economic Indicator

S&P Global Manufacturing PMI

The Manufacturing Purchasing Managers Index (PMI), released on a monthly basis by S&P Global, is a leading indicator gauging business activity in the UK’s manufacturing sector. The data is derived from surveys of senior executives at private-sector companies. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the manufacturing economy is generally expanding, a bullish sign for the Pound Sterling (GBP). Meanwhile, a reading below 50 signals that activity among goods producers is generally declining, which is seen as bearish for GBP.

AUD/USD keeps range near 0.6950 after Australian trade data

AUD/USD consolidates near a two-month low, trading around mid-0.6900s in the Asian session on Thursday amid a bullish US Dollar. The US PCE data tempered October Fed hike bets, though oil-driven inflation fears remain supportive of elevated US bond yields. Meanwhile, Australia's trade surplus shrank sharply in August to AUD495M, having limited impact on the Aussie Dollar and the pair.

USD/JPY sits at weekly top above 158.00 as bullish USD counters intervention risks

USD/JPY is sitting at the top end of its weekly range above 158.00 in the Asian session on Thursday. Despite the softer US PCE data, oil-driven inflation risks keep US bond yields elevated near multi-year highs. Moreover, the US-Iran standoff benefits the safe-haven US Dollar and supports the pair. Broad US Dollar strength counters hawkish BoJ expectations and Japanese intervention risks.

Gold fails ahead of $4,200 as surging US yields and Iran risks lift USD closer to YTD top

Gold struggles to capitalize on a modest intraday move up to the $4,200 neighborhood, trading nearly unchanged for the day during the first half of the European session. Despite softer-than-expected US inflation data on Wednesday, US Dollar buying remains unabated as US bond yields continue scaling new multi-year highs. This is seen as a key factor undermining demand for the non-yielding bullion.

Hyperliquid pares gains as ETF outflows cap tentative bullish recovery

Hyperliquid (HYPE) is down 2% at press time on Thursday, trimming its 5% gains from the previous day. Institutional demand is easing, with $5 million in outflows on Wednesday, weighing on near-term investors' sentiment. The technical outlook for HYPE indicates a near-term mixed tone as the price remains capped below $90.

The Euro is near a one-year low: Inflation could trigger its rebound, not its fall

EUR/USD has fallen to its lowest level since May 2025, but a fresh inflation shock in the Eurozone could give the Euro an unexpected lifeline. The pair hit 1.1312 on Wednesday and trades well below the January peak of 1.2082. The decline reflects a powerful combination of US Dollar strength, geopolitical uncertainty and renewed concerns about Europe's exposure to higher energy prices.

The Euro is near a one-year low: Inflation could trigger its rebound, not its fall

EUR/USD has fallen to its lowest level since May 2025, but a fresh inflation shock in the Eurozone could give the Euro (EUR) an unexpected lifeline. The pair hit 1.1312 on Wednesday and trades well below the January peak of 1.2082.