GBP/USD Movement Overview
The British Pound slid again on Thursday, with GBP/USD falling below 1.3200 to its lowest level since late June, as of 06:26 UTC+8 on 2 October 2026. The decline came as a sustained selloff in UK government bonds pushed long-dated gilt yields to multi-decade highs, with the pair now on track for a third straight weekly loss.
Key Driver Behind The Move
The UK 30-year gilt yield rose above 6% on Thursday for the first time since 1998, while the 10-year gilt yield reached its highest level since July 2007. Bank of England external member Catherine Mann argued in a speech the same day that the rise in borrowing costs reflects investors pricing in more inflation risk, not genuinely tighter financial conditions, and said the BoE needs to raise its Bank Rate from 3.75% to preserve its credibility. Markets have already priced in as many as four rate increases by next summer.
Market Data And Reaction
Higher gilt yields have not supported the Pound, as investors selling UK bonds on inflation concerns have been selling the currency alongside them. Mann traced part of the uncertainty to the BoE’s response to the outbreak of the US-Iran war in March, which she said markets read as the central bank adopting a wait-and-see approach; the BoE has held rates at every meeting since.
Broader Market Implications
The gilt selloff is unfolding against a wider backdrop of fiscal and political uncertainty, with Chancellor Healey due to present his first budget later in October. The 10-year gilt yield’s move to its highest level since July 2007 on Thursday came two days after the government sold new 10-year UK debt at the highest yield for that maturity since 1999, underscoring how persistent the pressure on UK borrowing costs has become. Gilts also rose on Thursday after US Treasury yields climbed, showing how closely the two markets are moving together.
What Forex Traders Should Watch
- US Nonfarm Payrolls, due Friday, forecast at 90K after August’s 162K reading
- US unemployment and average hourly earnings data, released alongside payrolls
- BoE’s Mann speaking again on Tuesday
- The Federal Reserve’s October 28 policy decision, with no pre-signalled guidance from Chair Warsh this cycle
