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The GBP/USD pair is bleeding on Wednesday following a brief recovery versus the stronger dollar. At the time of writing, GBP/USD is trading at 1.1609 and is recording a 0.4% loss on the day.
The sterling pierced the psychological 1.16 round level and faces its worst month since late 2016 against the dollar on hot UK inflation that is at 10% and keeps rising, with the Bank of England expected to hike interest rate next month.
High inflation triggered fears across financial markets on Wednesday which is serving as a bullish push for the US dollar and US Treasury yields. The two-year US Treasury yield, which is relatively more sensitive to the monetary policy outlook in the US, hit a 15-year high at 3.499% overnight but eased back to 3.446%.
The dollar index gained around 0.4% to 109.20, after starting the week by marking twenty-year high at 109.48. The dollar is on track for its third-straight monthly rise, with markets bracing for more oversized interest rate hikes from the US Fed.
