GBP/USD climbs nearly 3% in August despite lack of UK economic data or BoE policy shifts, driven by US Treasury yield dynamics.
The British pound sterling traded above 1.3600, nearing a five-month high, as the US dollar weakened on Treasury yield movements. GBP/USD gained roughly four cents in August, despite no new UK economic data or Bank of England policy changes since July’s hold decision.
The rally followed the US Treasury’s August 19 announcement to double long-dated buyback operations starting September 9. The move pushed the 10-year yield below 4.72% and the 30-year toward 5.25%, while the dollar index fell 2.5% over the past month.
Currency desks noted an unusual correlation last week, where rising yields coincided with a weaker dollar, defying typical reserve currency behavior. The shift has drawn attention to US fiscal policy as a key driver of sterling’s gains.