USD continues its 2 month rally

Market reports
Thanim Islam
  • Risk-off markets and higher yields drive USD
  • GBP continue to weaken


USD rallied to 2023 highs, with the index breaching the highs seen in March. Demand for the currency continued as 10-year treasury yields climbed on the implied belief that the US will hold interest rates high well into next year. EURUSD and GBPUSD both trade now at six-month lows. As a consequence of the USD gaining we saw outflows of EUR, causing GBPEUR to bounce off a prior support level.


Market rates

* Daily move - against G10 rates at 7:30am, 26.09.23

** Indicative rates - interbank rates at 7:30am, 26.09.23

Data points


  • None today.

Our thoughts

The USD rally continued overnight, with Asian equities and European and US futures all falling (i.e. markets being risk-off), and yields on US treasuries continuing to move higher. Today's calendar is looking light again so markets will likely be dictated by risk appetite, which at the moment is favouring USD.

Chart of the day

The dovish take from the BoE meeting dragged GBPEUR lower towards a prior support, where ultimately markets started to buy GBP given its relative ‘cheapness’ within its respective trading range. Both the UK and Europe seem to be in the same boat, with the prospect of stagflation looming over both economies and ultimately will likely continue to see the pair trade between this key support level and the highs of this year.

Source: Bloomberg Finance L.P.

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