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GBP/USD keeps moving back and forth on Tuesday in a day that ran through a vast territory for a fresh high for the week, so far, at 1.1489 from a low of 1.1280. The American dollar was hit hard by lower-than-expected JOLTS data that has accompanied weak Manufacturing data and anticipations of a less hawkish Federal Reserve.
The dollar slid against major currencies and along with yields, it would appear to reflect the market participants’ views on the outlook for interest rates. At the same time, participants in the sterling money markets welcomed the British government’s U-turn on some tax cuts.
The pound dropped to a record low of $1.0327 on Sept. 26 and bond prices tumbled following the unveiling of the new government’s plans to slash taxes, particularly for the rich, and ramp up borrowing.
It was not a popular plan and the plans to get rid of the 45% top rate of income tax has helped the pound to recover, adding to gains that were sparked by the Bank of England last week restarting its bond-buying programme following a dramatic plunge in long-dated gilts.
US yields, which move inversely to prices, were pressured at the start of the week and stayed low on Tuesday on more weak data in the JOLTS Job Openings.
