Treasury Yields Provide Strong Footing To USD While Hot Inflation Data Causes GBP To Decline

In Wednesday’s trading session, the trading value of the US dollar bounced from a low trading figure. The data shows that prior to the bounce, the trading value of the greenback was visiting a two-week low.

Treasury Yields helped Boost Dollar’s Price

On that particular day, the Feds revealed that the Treasury yields had demonstrated a remarkable performance. The data that came out for the Treasury yields showed that they had hit 14-year highs.

The information shared by the Feds helped boost the morale of the investors. The investors filled with positive sentiments rallied in favor of the trend.

This helped push the trading price of the USD in the latest trading session, providing it a stronger footing against the international currencies.

Sterling has weakened

Just as the trading price of the dollar has risen, the value of the sterling has moved south. The trading value of the sterling has weakened in the latest trading session.

This happened after the UK Feds shared the inflation data that was hotter than the expectations. This means that the inflation rate recorded in the month of September is higher than the expectations.

The situation for the UK economy would worsen in light of the latest inflation data that is not positive at all.

The government of the United Kingdom, which is already fragile due to the recent appointment of the new Prime Minister is now troubled by the hot inflation data.

Expectations of Less Aggressive Interest Hikes

Now that the situation has not worked out in favor of the UK Feds, they have no choice but to deal with the problem as a matter of urgency.

As the inflation rates are constantly rising in the United Kingdom, the fears of recession and long-term economic downfall are growing stronger.

Faced with the alarming situation, the UK Feds have no choice but to lower the interest rates. This would eventually pull the trading price of the sterling even lower, making things worse in terms of forex.

Now, the decision is in the hands of the Bank of England (BoE). The central bank has to come up with a strategy in order to deal with the growing inflation rates and tweak the interest rates accordingly.

Sterling to Hit an Even Lower Value

It is expected that the Bank of England may have no choice but to either increase the interest rates with less aggression or not increase them at all.

In both cases, the trading value of the sterling may decline versus the USD. The USD has already hit a 32-peak price versus the sterling and the situation would only grow worse for the British currency in November.

The data shows that the value of the USD has surged by 0.73% against the basket currencies. The GBP has reportedly declined by 0.61% versus the USD while the EUR has declined by 0.80%

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