The British pound advanced 0.25% against the dollar on Thursday, reaching $1.3640 by 09:40 GMT, as the U.S. currency weakened following an unscheduled announcement from the U.S. Treasury.
The Treasury said it would increase liquidity buyback operations by $2 billion to address elevated long-end bond yields, a move that triggered a broad decline in U.S. Treasury yields. Longer-dated yields fell roughly 10 basis points, while shorter-dated yields dropped by about 5 basis points after the release of the latest Federal Open Market Committee (FOMC) meeting minutes.
The dollar index, which tracks the greenback against a basket of major currencies, broke below its recent range of 99.40 to 100, with traders eyeing a potential drop toward 98.65. The euro also gained 0.21% to $1.1702, trading near ING’s end-September target of 1.17. Chris Turner, global head of markets at ING, noted that the Treasury’s announcement signaled displeasure with the recent sell-off in long-term bonds, adding that the move could reduce risks to risk assets this summer.
Turner also suggested that the intervention could support carry trade strategies, as the so-called "Bessent Put"—a reference to perceived Treasury support—lowers one of the key threats to market stability. He added that while resistance at 1.1700 may limit near-term gains for the euro, a break above that level could open the path to 1.1790.
The U.S. Treasury’s decision followed the release of FOMC minutes, which revealed a hawkish tilt among policymakers, including Federal Reserve Governor Mary Daly, a voting member who supported a rate hike in July. Non-voting member Alberto Musalem also contributed to the hawkish tone.
Separately, ECB data showed that foreign investors purchased approximately €1.1 trillion in eurozone securities over the past 12 months, with June marking the largest monthly debt purchases on record at €200 billion. The data underscores continued strong demand for eurozone debt despite broader market volatility.
Sterling’s gains were primarily driven by dollar-side dynamics, with global risk sentiment improving in a "risk-on, dollar-off" environment. UK-specific fundamentals, domestic politics, and material economic data releases played no material role in the move.
