PoundSterlingLIVE - Above: GBP is down against all G10 peers.
We are seeing a repeat of the Liz Truss-inspired market ructions.
A massive selloff strikes the British Pound in midweek trade, and we suspect anxieties over the UK's rising debt might be behind it.
Pound Sterling is being sold across the board and is registering sharp losses against all its G10 rivals.
The selloff is sudden and broad-based: because all GBP pairs are selling off, we know this weakness is specifically targeted at the Pound.
What is behind the move? There are no immediate and obvious triggers, but we suspect the selloff in UK bond yields is starting to make its presence felt.
In fact, a look at the benchmark ten-year bond yield shows a sizeable surge in the past hour:
We have been reporting for days now that UK borrowing costs have been surging, which will put the governments finances under severe pressure in the coming months.
However, despite long-term debt yields reaching 30-year highs, the FX market has been relatively sanguine.
Has FX suddenly now taken notice?
Typically rising bond yields would be associated with a stronger currency, but we are not seeing this:
The Pound to Dollar exchange rate has dropped to a daily loss of 1% taking it to 1.2345, the Pound to Euro exchange rate is down 0.5% at 1.20.
"One of the biggest red flags in macro markets - and a sign of fiscal un-anchoring - is yields up and currency down. This is happening again in the UK (the last proper time we saw this was Q4 '22... after 'that' Budget). Looks ominous," says Viraj Patel, a strategist at Vanda Research, referencing the Pound.
An original version of this article can be viewed at Pound Sterling Live