{"id":23764,"date":"2025-09-02T10:13:32","date_gmt":"2025-09-02T10:13:32","guid":{"rendered":"https:\/\/www.vtmarkets.com\/?p=23764"},"modified":"2025-09-02T10:13:32","modified_gmt":"2025-09-02T10:13:32","slug":"sterling-under-strain-as-bond-markets-hit-historic-levels","status":"publish","type":"post","link":"https:\/\/www.vtmarkets.com\/en-eu\/analysis\/sterling-under-strain-as-bond-markets-hit-historic-levels\/","title":{"rendered":"Sterling under strain as bond markets hit historic levels"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"536\" src=\"https:\/\/www.vtmarkets.com\/en-eu\/wp-content\/uploads\/sites\/33\/2025\/09\/20-1-1024x536.png\" alt=\"\" class=\"wp-image-23767\" srcset=\"https:\/\/www.vtmarkets.com\/en-eu\/wp-content\/uploads\/sites\/33\/2025\/09\/20-1-1024x536.png 1024w, https:\/\/www.vtmarkets.com\/en-eu\/wp-content\/uploads\/sites\/33\/2025\/09\/20-1-300x157.png 300w, https:\/\/www.vtmarkets.com\/en-eu\/wp-content\/uploads\/sites\/33\/2025\/09\/20-1-768x402.png 768w, https:\/\/www.vtmarkets.com\/en-eu\/wp-content\/uploads\/sites\/33\/2025\/09\/20-1-500x262.png 500w, https:\/\/www.vtmarkets.com\/en-eu\/wp-content\/uploads\/sites\/33\/2025\/09\/20-1-400x209.png 400w, https:\/\/www.vtmarkets.com\/en-eu\/wp-content\/uploads\/sites\/33\/2025\/09\/20-1-350x183.png 350w, https:\/\/www.vtmarkets.com\/en-eu\/wp-content\/uploads\/sites\/33\/2025\/09\/20-1-200x105.png 200w, https:\/\/www.vtmarkets.com\/en-eu\/wp-content\/uploads\/sites\/33\/2025\/09\/20-1.png 1200w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p><\/p>\n\n\n\n<p>Sterling faces renewed pressure as bond market swings, fiscal uncertainty, and political shifts test investor confidence. Traders are watching to see whether the pound can steady or slide further.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\"><strong>Pound hit by debt concerns<\/strong><\/h2>\n\n\n\n<p>The British pound dropped more than 1% on Tuesday, sliding to $1.3422, as a sharp selloff in UK government bonds pushed 30-year gilt yields to their highest level since 1998.<\/p>\n\n\n\n<p>The move has reignited market concerns over the UK\u2019s fiscal outlook and its ability to keep public debt under control.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">Buffeted by this year\u2019s surge in sterling and the slide in the dollar, British companies are upping their protection against foreign-exchange swings <a href=\"https:\/\/t.co\/4eufNzflJP\">https:\/\/t.co\/4eufNzflJP<\/a><\/p>&mdash; Bloomberg (@business) <a href=\"https:\/\/twitter.com\/business\/status\/1961335205576216834?ref_src=twsrc%5Etfw\">August 29, 2025<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p><\/p>\n\n\n\n<p>While the downturn in gilts mirrored the broader global bond market repricing, sterling\u2019s sharpest one-day fall since June has underscored the UK\u2019s fragility.<\/p>\n\n\n\n<p>Chancellor Rachel Reeves is expected to announce tax hikes in the autumn budget in a bid to meet fiscal rules, a move that could weigh on economic growth.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">With the UK economy showing signs of life, most economists believe British finance minister Rachel Reeves will deliver a fiscally prudent budget, but tax rises are inevitable <a href=\"https:\/\/t.co\/Y0NzSTFrgL\">pic.twitter.com\/Y0NzSTFrgL<\/a><\/p>&mdash; Reuters (@Reuters) <a href=\"https:\/\/twitter.com\/Reuters\/status\/1961462598953832745?ref_src=twsrc%5Etfw\">August 29, 2025<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p><\/p>\n\n\n\n<p>At the same time, Prime Minister Keir Starmer reshuffled his cabinet this week in preparation for what is expected to be a challenging close to the year.<\/p>\n\n\n\n<p>Rabobank strategist Jane Foley noted that although revised Bank of England expectations supported sterling last month, fiscal headwinds tied to the autumn budget may continue to limit gains.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">Are fears over the dollar&#39;s demise overblown? Jane Foley from Rabobank told Reuters that a lot of the factors that created pressure on the currency earlier have now been &#39;downgraded&#39; <a href=\"https:\/\/t.co\/ZAmfaYox4X\">pic.twitter.com\/ZAmfaYox4X<\/a><\/p>&mdash; Reuters (@Reuters) <a href=\"https:\/\/twitter.com\/Reuters\/status\/1950959642399351109?ref_src=twsrc%5Etfw\">July 31, 2025<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p><\/p>\n\n\n\n<p>The UK is not alone in facing scrutiny. In France, 30-year bond yields surged to their highest level in over 16 years, with Prime Minister Fran\u00e7ois Bayrou working to prevent a potential government collapse.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\"><strong>Technical analysis<\/strong><\/h2>\n\n\n\n<p>Since touching February\u2019s low near 1.2250, GBP\/USD has maintained an upward trajectory, climbing steadily to a July peak of 1.3788 before retreating.<\/p>\n\n\n\n<p>The pair is now trading around 1.3422, still holding above the key 1.3300 support zone.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"450\" src=\"https:\/\/www.vtmarkets.com\/en-eu\/wp-content\/uploads\/sites\/33\/2025\/09\/image-1024x450-1.jpeg\" alt=\"\" class=\"wp-image-23765\" srcset=\"https:\/\/www.vtmarkets.com\/en-eu\/wp-content\/uploads\/sites\/33\/2025\/09\/image-1024x450-1.jpeg 1024w, https:\/\/www.vtmarkets.com\/en-eu\/wp-content\/uploads\/sites\/33\/2025\/09\/image-1024x450-1-300x132.jpeg 300w, https:\/\/www.vtmarkets.com\/en-eu\/wp-content\/uploads\/sites\/33\/2025\/09\/image-1024x450-1-768x338.jpeg 768w, https:\/\/www.vtmarkets.com\/en-eu\/wp-content\/uploads\/sites\/33\/2025\/09\/image-1024x450-1-500x220.jpeg 500w, https:\/\/www.vtmarkets.com\/en-eu\/wp-content\/uploads\/sites\/33\/2025\/09\/image-1024x450-1-400x176.jpeg 400w, https:\/\/www.vtmarkets.com\/en-eu\/wp-content\/uploads\/sites\/33\/2025\/09\/image-1024x450-1-350x154.jpeg 350w, https:\/\/www.vtmarkets.com\/en-eu\/wp-content\/uploads\/sites\/33\/2025\/09\/image-1024x450-1-200x88.jpeg 200w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>Picture: GBPUSD-ECN trades at 1.34221, down 0.91% from its recent high as it shown on the <a href=\"https:\/\/apps.apple.com\/au\/app\/vt-markets-online-trading\/id1372647263\" target=\"_blank\" rel=\"noopener\" title=\"VT Markets app\">VT Markets app<\/a>.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<p>Short-term moving averages (5, 10, and 30) are levelling off, signalling a consolidation phase.<\/p>\n\n\n\n<p>Meanwhile, the MACD has eased back to hover near the zero line, reflecting a loss of momentum compared with earlier in the year.<\/p>\n\n\n\n<p>Immediate resistance is seen at 1.3550\u20131.3600, with a break higher paving the way for a retest of July\u2019s 1.3788 high.<\/p>\n\n\n\n<p>On the downside, support remains at 1.3300, with the risk of a deeper move toward 1.3100 if that level gives way.<\/p>\n\n\n\n<p>For now, GBP\/USD appears range-bound, with direction likely to be shaped by <a href=\"https:\/\/finance.yahoo.com\/news\/higher-core-inflation-reading-unlikely-to-knock-fed-off-course-for-rate-cut-in-september-151751537.html\" target=\"_blank\" rel=\"noopener nofollow\" title=\"US inflation figures\">US inflation figures<\/a>, Federal Reserve policy signals, and upcoming UK growth data.<\/p>\n\n\n\n<p><strong>Cautious forecast<\/strong><\/p>\n\n\n\n<p>If fiscal concerns intensify and gilt yields stay elevated, GBP\/USD could retest the 1.3300 threshold in the near term.<\/p>\n\n\n\n<p>A sustained break below this level may extend losses toward 1.3100, which would mark a significant reversal from the summer rally.<\/p>\n\n\n\n<p>Such a move could also dent investor confidence further, especially if global risk sentiment remains fragile.<\/p>\n\n\n\n<p>However, stronger signs of fiscal discipline in Rachel Reeves\u2019 autumn budget could provide a stabilising effect.<\/p>\n\n\n\n<p>Clear measures to contain debt levels may help the pound recover, with a rebound towards 1.3550 becoming more likely.<\/p>\n\n\n\n<p>In addition, any supportive developments from the Bank of England \u2013 such as firmer guidance on interest rates \u2013 could limit sterling\u2019s downside.<\/p>\n\n\n\n<p>Overall, traders should expect heightened volatility in the months ahead, with GBP\/USD likely to remain highly sensitive to both UK fiscal signals and broader global market dynamics.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<p>Click <a href=\"https:\/\/www.vtmarkets.net\/trade-now\/?utm_campaign=account_c&amp;utm_source=dma&amp;utm_medium=website\" target=\"_blank\" rel=\"noopener\" title=\"here\">here<\/a> to open account and start trading.<\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Sterling faces renewed pressure as bond market swings, fiscal uncertainty, and political shifts test investor confidence. Traders are watching to see whether the pound can steady or slide further. Pound hit by debt concerns The British pound dropped more than 1% on Tuesday, sliding to $1.3422, as a sharp selloff in UK government bonds pushed <a href=\"https:\/\/www.vtmarkets.com\/en-eu\/analysis\/sterling-under-strain-as-bond-markets-hit-historic-levels\/\" class=\"read-more\">Continue Reading<\/a><\/p>\n","protected":false},"author":5,"featured_media":23767,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[37],"tags":[],"class_list":["post-23764","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-eu\/wp-json\/wp\/v2\/posts\/23764","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-eu\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-eu\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-eu\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-eu\/wp-json\/wp\/v2\/comments?post=23764"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-eu\/wp-json\/wp\/v2\/posts\/23764\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-eu\/wp-json\/wp\/v2\/media\/23767"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-eu\/wp-json\/wp\/v2\/media?parent=23764"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-eu\/wp-json\/wp\/v2\/categories?post=23764"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-eu\/wp-json\/wp\/v2\/tags?post=23764"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}