There is currently about a 46bps premium in 2y UST rates compared to U.K. Gilts, the spread favouring U.S. rates is now at the highest level in a year
We have seen a lower pound since mid-March, however, rate differentials suggest there is further downside for GBP/USD
A major correction in U.K. Gilts has failed to materialize despite the recent wage and inflation data releases
The last time U.K.-U.S. front-end rate spreads were at this level, GBP/USD was trading between 1.22 and 1.23
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