GBP/USD Drops 0.6% as UK Gilt Yields Surge to Multi-Year Highs

GBP/USD has plummeted 0.6% to 1.2740 as UK government bond yields exploded higher, with 30-year gilt yields jumping 15 basis points to 4.95%, the highest since 2008. The pound came under severe pressure as the gilt market selloff signals growing concerns about UK fiscal sustainability and inflation persistence. The surge in borrowing costs threatens to constrain government spending and potentially impact economic growth. Market participants are reassessing BoE rate cut expectations, with only 8bps of easing now priced for 2024. Technical analysis shows GBP/USD breaking below the 1.2800 support level, with next support at 1.2700. The 10-year gilt yield reached 4.40%, up from 4.25% last week. This bond market turmoil could force the BoE to maintain higher rates longer, but paradoxically weakens sterling due to growth concerns and fiscal stress.