Prime Numbers in the Money Market
GBP Gets a Boost – The British pound has been on a winning streak, climbing 0.17% per day for the third straight day against the US dollar. It just hit the 1.27296 mark again.
Euro Takes a Skip
The euro has dipped against the pound by a solid 0.17%, sliding close to its lowest point since August 2022. It’s currently trading at 0.84364.
Why the Pound Is Pumping
- Inflation in the UK is ticking over at the slowest pace in 2½ years – no shock factor.
- UK gilt yields are on the rise, and the spread to US Treasuries is tightening.
- Despite the data, markets are still chewing on the idea that the Bank of England might cut rates in August, but they’re keeping the Feb‑2026 stance steady for now.
Yield Gap Talk
UK 10‑year gilt yields bounced back after hitting two‑month lows. The UK-US gap is narrowing, hinting at a possible zero‑point future that could push the pound higher.
Meanwhile, German bund yields are staying flat, which widens the UK connector. Today’s numbers show:
- UK 10‑yr gilt: 4.08%
- US Treasury: 4.129%
- German Bund: 2.389%
Resulting gaps: US‑UK = 0.135%, Bund‑UK = -1.692%.
Inflation Update (May)
- Consumer Price Index slowed to 2% YoY (was 2.3% expected), 0.3% MoM (slower than forecast).
- Core inflation dropped to 3.5% YoY from 3.9%.
- Producer Price Index mixed: input prices flat instead of dropping 0.3%, output prices fell 0.1% vs. expected rise.
Bottom line: The pound keeps climbing while the euro has earned a costly lesson in staying still.
