The pound posted a big bounce in trading yesterday, coming up above 1.1000 against the dollar. The high briefly clipped 1.1200 today but amid volatile trading, cable is now trading back down just below 1.1100. Meanwhile, there was some mixed action across broader markets with equities being hammered while some commodities held higher. As for bond yields, it came back up slightly after having plummeted on Wednesday following the BOE's QE-style intervention in gilts.
It's all about the flows and technicals (to some extent) but the former is what is dominating sentiment at the moment. With month-end and quarter-end also in focus, it will just add to the mess and make it tough to really read through the volatile moves in the past few sessions. Trading today will also be no different in my view.
I reckon we'll only get a better sense of the market appetite and real money positioning once we get past this period and move towards October trading next week. As such, don't be surprised if we get some contradictory and sudden volatile moves in markets later today before the weekend.
If you're not keen to take on the volatility in the day ahead, the best thing you can do is sit on the sidelines and read how the moves go up against key technical levels. That will give you a better idea on how to weigh that against the prevailing fundamental backdrop (hawkish Fed, equities under pressure, bond drop vs BOE relief, high inflation, and growing recession risks) before making your next move.