Pound slips as global bond rout lifts dollar; 30-year gilt yields hit 6%

# What happened A global bond sell-off pushed long-term yields in the U.S. and the U.K. sharply higher and kept the dollar near its strongest levels of the year. That move weighed on sterling: GBP/USD traded down about 0.38% at $1.3215. EUR/USD fell to about $1.1288, down roughly 0.37%.

# Market drivers

ADP data pointed to accelerating payrolls, and investors are now focused on incoming U.S. data: weekly jobless claims, ISM manufacturing (consensus 55), and Friday's nonfarm payrolls. Fed voters Neel Kashkari and Chris Waller were scheduled to speak, which could influence market interpretation of policy direction.

# Why sterling was hit Sterling's decline reflected two main forces: a stronger dollar and a domestic gilt sell-off. UK 30-year gilt yields rose to about 6%, the highest level in nearly 30 years. That spike increased market pressure on U.K. assets and coincided with a nearly 2% drop in London's FTSE 100, compounding pressure on Chancellor John Healey as he prepares for his first Budget later in October.

# Euro and European risks ING said the euro's weakness largely reflects a hawkish reassessment of Fed policy rather than independent euro weakness. But the widening of the OAT-Bund spread to 127 basis points was flagged as a concerning development that could add a risk premium to euro-area debt and constrain the ECB's ability to tighten further. ECB speakers Joachim Nagel, Christine Lagarde and Isabel Schnabel were on the schedule, though ING judged it unlikely the ECB would "out-hawk" the Fed.

ING suggested EUR/USD might find a short-term floor around 1.1300–1.1320, but warned a further widening of European debt spreads combined with strong U.S. data could push the pair down toward 1.11–1.12.

# What traders are watching next

• U.S. weekly jobless claims and ISM manufacturing prints for signs of continued U.S. strength.
• Friday's nonfarm payrolls, a major near-term catalyst for risk and dollar moves.

# Bottom line A global bond rout and higher long-term yields have strengthened the dollar and pressured sterling. Immediate market moves will hinge on incoming U.S. economic data and speeches by central bank officials, while widening European debt spreads add a separate risk to euro-area rates and the ECB's policy path.