The pound came into the day riding a six-day winning streak against the US dollar.
USD was sliding on the hope that long-dated rates had peaked and that the Fed would have plenty of room to cut next year. The latest data paints something of a different picture with inflation at 3.7% y/y and other had data holding up fine. The Cleveland Fed also posted its latest nowcast for inflation and has CPI running at 3.79% in Q4 annualized and 4.01% on the core.
Those aren't the kind of numbers that will encourage the Fed to adopt a more-neutral stance. In turn, the US dollar is broadly strengthening and US 10-year yields are up 6.7% to 4.66% after falling as low as 4.53% before the data.
So far, the 100 pip drop today has wiped out the gains from Tues-Wed in cable.
The next event to watch is a US 30-year auction. There plenty of people who want to buy duration but are worried about the Treasury announcing higher coupon sizes next month.
