Big levels in play in GBP/USD
The dollar bulls are on parade today and GBP/USD is in the crosshairs. The euro has broken through the key 1.1500 level and now cable is a hair away from breaking the 1.3412 September low.
The bond bears have a tough fight on their hands as they take on the Fed but momentum is on their side at the moment.
What puzzles me is that the dollar is trading as if higher inflation is a US problem and only the Fed will be forced to hike. In reality, if the Fed has to change gears, so will the BOE and rate hikes will come quicker in the UK.
Of course, all of that ignores the potential ripples from the risk aversion that would come with inflation trouble and hurried rate hikes.