GBP/USD plummets as UK gilt yields surge amid fiscal concerns

GBP/USD has tumbled sharply as UK government bond yields spike, creating significant pressure on sterling. The gilt market turmoil reflects growing investor concerns about UK fiscal sustainability and potential inflationary pressures. UK 2-year yields have surged above 4.5%, while 30-year yields approached multi-year highs, signaling deteriorating confidence in UK debt markets. The pound's weakness extended across other pairs, with GBP/CHF also declining notably as traders seek safe-haven currencies. Market participants fear the Bank of England may face a difficult balancing act between supporting growth and containing inflation expectations. Technical analysis shows GBP/USD has broken below key support at 1.2650, with next major support at 1.2600. Resistance now sits at 1.2700. The gilt market stress could persist, keeping pressure on sterling until fiscal clarity emerges or the BoE provides reassurance about monetary policy stability.