The US dollar is showing broad strength today as risk aversion sets in and the pound is suffering. GBP/USD climbed initially on the BOE decision but the sellers pounced and since then it's been caught in a broad post-ECB downdraft.
Going into Wednesday, the market was feeling good about the chances that a number of global central banks would downshift to something less hawkish. Rates everywhere were hiked 50 bps, which was in line with estimates but that was coupled with multiple forecasts for higher terminal rates.
In turn, the market is growing increasingly concerned about 2023 global growth, despite moves by China to stimulate.
The drop today in cable wipes out a week of gains and raises the risk that the bounce since October is overstretched.
The London fix might have been a factor in today's selling but given what's likely to be massive liquidity today, I expect that this is a fundamentally-driven move.
