We regularly explain currency movements in terms of monetary policy. Basically, the idea is that a rise in bond yields translates into a greater attractiveness of the corresponding currency, which therefore tends to rise. To qualify this, we also look at the yield spread between two currencies to detect interesting carry trade situations. With UK 10-year yields higher than those in the US, we would naturally expect sterling to appreciate against the greenback. And yet! Since last September, cable has given up almost 10%, and there's more to come. Our downside targets are in the region of 1.1973/08, or even 1.1638 if things really take off.

Continental Europeans might well be tempted to laugh it off and tell British people that they're just reaping the rewards of Brexit, but that would be forgetting the equally violent plunge of the European single currency. Last week, it stumbled on the resistance zone mentioned at 1.0429/50 and is heading for intermediate support at 1.017 before considering parity or even 0.9928/12.

Overall, the situation on the various crosses is identical: the dollar is rising and the counterparty is falling. Thus, the USDJPY and USDCHF are quietly heading towards their 2024 highs of 161.95 and 0.9224/65. With the latter about to be rallied, we'll be keeping an eye on the next resistance level at 0.9423/0.9350. As for commodity currencies, USDCAD is consolidating flat below 1.4461, with initial support at 1.4222. The same applies to the Aussie and Kiwi, with initial resistance at 0.6315 for the former and 0.5730 for the latter, while support is at 0.6098/6080 and 0.5510/0.5468 respectively.