The pound soars to a six-month high as the services PMI exceeds expectations and the Federal Reserve turns dovish, with short covering boosting the rally.
智通财经2026/08/21 14:01- On Friday, the British pound surged intraday to 1.3675 US dollars, reaching its highest level in six months. This came after the release of the UK’s August preliminary Services PMI, which outperformed market expectations and provided strong immediate support for the pound.
- Since Wednesday, when the US Treasury announced an expansion of its long-term bond repurchase program, the pound has strengthened consecutively. This policy has driven down long-term US Treasury yields, undermining the US dollar's interest rate advantage and resulting in a market tone that continues to favor the pound.
- The factors driving the pound's rise are diverse, with the core being a shift in Federal Reserve policy expectations. After the Federal Reserve held rates steady at its July meeting, market expectations for rate hikes this year and next have narrowed significantly. Currently, institutions predict the Bank of England’s policy path for 2027 will be slightly more hawkish than the Federal Reserve, and the interest rate differential expectations provide structural support for the pound.
- The US Treasury Secretary's remarks about increasing long-term bond repurchases triggered a short squeeze in long-end US Treasuries, signaling to speculative funds not to make unilateral bets on rising US Treasury yields. Meanwhile, the latest futures position data show a large scale of speculative short positions in the pound. As expectations for both the short and long ends of the US Treasury yield curve decline, short covering has further amplified the pound’s upside momentum.
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