The sterling slumped against the US dollar, losing as much as 1.2% intraday and erasing all gains from Fed Chair Powell’s dovish Jackson Hole speech on 22 August 2025.
Based on a one-day rolling performance basis as of Tuesday, 2 September, the sterling is the weakest major currency against the greenback, where the USD/GBP gained by 1.1% at the time of writing (see Fig. 1).
Fig. 1: 1-day rolling performances of the US dollar against major currencies as of 2 Sep 2025 (Source: TradingView)
30-year gilt yield jumped to a 27-year high
Fig. 2: 30-YR Gilt yield long-term secular trend as of 2 Sep 2025 (Source: TradingView)
The longer-term UK sovereign bond yield extended its gains further today, where the 30-year gilt yield jumped by 6 basis points to hit 5.69%, its highest level since March 1998.
The recent spike in the 30-year gilt yield is over concerns of a widening UK budget deficit due to UK Chancellor Rachel Reeves’ decision to increase borrowing in last year’s budget, in turn increasing the “risk premium” on longer-term gilts because of uncertainty over its rising debts.
Today’s current environment in the UK gilt market draws a parallel to the 2022 gilt crisis triggered by former UK Prime Minister Liz Truss’s “mini” budget that focused on a loose fiscal policy that triggered significant spikes in the 30-year gilt bond yield and a sell-off in sterling.
Fig. 3: GBP/USD minor trend as of 2 Sep 2025 (Source: TradingView)
Preferred trend bias (1-3 days)
Bearish bias on the GBP/USD with key short-term pivotal resistance at 1.3460 to expose the next supports at 1.3370 and 1.3315/1.3280 (medium-term pivot) (see Fig. 3).
Key elements
Price actions of the GBP/USD have traded below the 20-day and 50-day moving averages.
The 4-hour RSI oscillator has not reversed up from its oversold region (below 30), which suggests that short-term bearish momentum is likely to persist at this juncture.
The 1.3315/1.3280 medium-term pivotal support zone is defined by the medium-term ascending trendline from the 13 January 2025 low, the former minor congestion area from 4 August 2025 to 6 August 2025, and the 61.8% Fibonacci retracement of the prior minor rally from the 1 August 2025 low to 14 August 2025 high.
Alternative trend bias (1 to 3 days)
A clearance above 1.3460 key resistance on the GBP/USD negates the bearish tone to retest the minor range resistance of 1.3545.