Pound Extends Decline as US Yields Continue to Climb

Sterling remained under pressure against the dollar during European trading on Thursday, trading near 1.3232. The primary driver of dollar strength stems from the continued rise in US Treasury yields, as markets firmly anticipate further monetary policy tightening by the Federal Reserve this year.

**Rising US Yields Intensify Pressure on Pound**

Recent US macroeconomic data has beaten expectations, coupled with the Fed's hawkish policy stance, leading to a widening yield gap between the US and other major economies. This interest rate differential is attracting capital flows into dollar-denominated assets, directly weighing on non-USD currencies like the pound. According to market reports, the upward trend in US Treasury yields has prompted investors to reassess valuations of major currency pairs, with sterling facing more downside risks against the dollar in the near term.

**External Factors Compound Dollar Strength**

Beyond yield factors, external elements such as surging oil prices have provided additional support for the dollar. Earlier, sterling had extended losses for a second consecutive trading day during the Asian session, trading near 1.3510 at one point. As US Treasury yields push higher amid multiple tailwinds, the pound's correction pressure has increased significantly. Analysts note that current market pricing of the Fed's policy path is already fairly comprehensive; if subsequent economic data continues to support the hawkish stance, the dollar may maintain a relatively strong pattern.

**Market Focus on Policy Expectation Game**

Notably, recent moves by the US Treasury in the bond market have sparked widespread market discussion. According to reports, the 30-year Treasury yield spiked to 5.32% on August 19, marking a new high since 2007. Since then, speculation has intensified over whether the Treasury might actively influence long-term rates, with some Wall Street figures dubbing this the "Bessent put option." This policy expectation game could amplify two-way volatility in US Treasury yields, thereby influencing the short-term direction of currencies such as the pound.