British Pound jumps as Treasury buyback weakens the US Dollar

• GBP/USD climbs as Treasury buyback drives yields and Dollar lower.
• UK CPI rise keeps BoE rate-hike risks modestly alive.
• Fed minutes loom after three hawkish dissents at last meeting.

The Pound Sterling climbs against the Greenback on Wednesday as the US Treasury stepped up in the markets to offer liquidity support via a buyback of longer-dated bonds, a day after the US 30-year yield hit its highest level since 2007. The GBP/USD trades at 1.3610 after bouncing off daily lows of 1.3523.

GBP/USD rallies as US Treasury buyback lowers yields before Fed minutes

The announcement by the US Treasury Secretary pushed US yields lower, as did the Dollar. The US Dollar Index (DXY), which tracks the performance of the buck’s value against six currencies, is down 0.84% at 98.80, near levels last seen by the end of May.

The rise in US yields at the long end of the curve has been driven by higher-than-expected inflation expectations, due to elevated Oil prices stemming from the lack of resolution in the US–Iran conflict.

The US ambassador to Israel said that a large-scale warfare against Iran remains an option. However, he acknowledged that he is working to establish a mechanism with Syria, Israel and Turkey to de-escalate the conflict, reported Al Hadath.

In the meantime, traders are bracing for the release of the Federal Reserve’s last meeting minutes. The absence of communication from the new Fed Chair, Kevin Warsh, makes the unveiling of the minutes a crucial event for traders to guess the Fed’s next move. 

Worth noting that there were three dissenters in the last meeting, led by Cleveland Fed Beth Hammack, Dallas Fed  Lorie Logan and Minneapolis Fed Neel Kashkari.

Across the Atlantic, inflation in the UK showed a mixed reading in July, with headline CPI rising as expected from 2.6% to 2.9%; while core CPI steadied at 2.6% YoY, a tenth above the expected 2.5%.

After the data, expectations that the Bank of England (BoE) would raise rates at the September meeting remain nimble. Money markets had priced in an 80% chance of a hold, while there’s a 20% chance of a 25-basis-point rate hike at the September 17 meeting, revealed Prime Terminal.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3606. The pair holds a bullish near-term bias as spot sits on an upward support trend line at 1.3606, with a cluster of former resistance trend lines and the 50/100/200-day simple moving averages (SMA) now acting as stacked support between roughly 1.3501 and 1.3386. The Relative Strength Index (14) at 68.2 is nearing overbought territory, which suggests strong but potentially stretched upside momentum, while the FXS Fed Sentiment Index softens, hinting that policy-related headwinds could slow the advance without yet undermining the broader constructive structure.

On the downside, initial support is found at the current trend-line pivot around 1.3606, followed by the reclaimed downtrend line near 1.3501 and the earlier resistance line broken at 1.3412. Deeper pullbacks would meet structural demand at the triple SMA cluster around 1.3386 and the lower rising trend-line break at 1.3362, where buyers are likely to defend the broader uptrend.

(The technical analysis of this story was written with the help of an AI tool. Know more.)