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TradingwDavid
Aug 31, 2022 9:22 AM

GBP-USD Long

GB10Y-US10YTVC

Description

In the chart, you can see in blue GBP-USD and in black the yield differential of the UK and US 10-year bonds.

Usually, the two lines are correlated; whenever this correlation has been lost, it has always been GBP-USD that has realigned with the yield differential (as evidenced in 2020 and as was also the case at the turn of 2018).

Now a new divergence has formed. It is not certain that GBP-USD will start to rise from today, but sooner or later it will realign, as it has done in the past, with the yield differential.
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