Lower US Treasury yields are having a negative impact on the US currency as the narrative shifts from inflation fears to recession worries. It is getting harder to imagine the USD pushing far higher, even versus the Japanese Yen, despite the fact that the dollar will continue to have some fundamental strength that will restrict any fall. Ten-year US Treasury bonds currently yield 3.17%, and the yield is currently expected to stay between 3.00% to 3.48%.
Notwithstanding more political difficulties for the blunder-prone PM Boris Johnson, the British pound has remained largely stagnant. Despite declaring by week’s end that he wants to run for three mandates, the Prime Minister is fighting to maintain the keys to No. 10 Downing Street because an increasing number of Conservative MPs are tired of the PM’s actions. The PM appears poised to maintain his position of authority for the foreseeable future, but no credible rival has yet been identified.
The GBP/USD exchange rate is currently trending either up over 1.2300 or is drifting upward from the low point of 1.1934 on June 14. The 20-day and 50-day simple moving averages (SMAs) are both being approached by Cable, and it may be challenging to break any of them decisively.