UK Chancellor Reeves: UK remains committed to fiscal rules at all times. GBPUSD still down

UK Chancellor of the Exchequer Rachel Reeves is being grilled by members of Parliament today. Yields in the UK have been surging with the high yield reaching 4.905% this week. That is the highest level since 2008. At the same time, the GBP has been moving lower.

• Remains committed to fiscal rules at all times
• The chancellor stated the government will go “further and faster” on its growth plan.
• Described market volatility as the result of “global economic uncertainty.”
• Defended her trade visit to China and her Budget policies.
• Reaffirmed commitment to self-imposed fiscal rules, which may require spending cuts soon.
• Acknowledged the need for a more detailed and urgent growth plan.
• Plans to prioritize growth at the World Economic Forum in Davos, with a speech on growth next week.
• Emphasis on infrastructure, trade, and industry ahead of the Office for Budget Responsibility’s March forecast.
• After a period of turbulence, the pound and UK government borrowing costs are showing signs of stabilising today

The GBPUSD is trading back to the downside as the PPI data and the early comments from Reeves failed to send the pair higher. The low for the day just extended to 1.21368

The highs today were able to get above the low from last Thursday at 1.2238, but could NOT extend above the falling 100 hour moving average currently at 1.22525. The high price in the Asian session reached 1.2249 and the high price in the European session reached 1.2245 before rotating back to the downside. Unless the price can get above the 100 hour moving average and then the 38.2% retracement of the last move lower from last week’s high, the sellers are still more in control

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Looking at the 10 year yield, last week, the level moved above the highs from 2023 at 4.754%, and reached a new high going back to 2008 at 4.925%. The high yield today reached 4.894%. The low was at 4.838%.

It would take a move and staying below 4.755% to give the bond buyers some comfort. Absent that and the fear for a continued run is still a possibility.

This article was written by Greg Michalowski at www.forexlive.com.