GBP/USD holding its breath and here is why that is

There is no doubt the Pound has suffered from the rebound in the dollar. That has also impacted the EUR/USD and the USD/JPY of course too, but it might not just be the firmer dollar that has halted the GBP/USD rebound dead in its tracks above 1.34 and sent it back towards the 1.30 handle where it is this morning. Now of course we have the very important US CPI report due out later today and that could have a dramatic impact either way on the dollar and the Pound. However, beyond that there is something that is troubling Pound traders and that is mounting concerns the new UK chancellor will attempt to adjust the fiscal rules in order to borrow more cash, by going off the balance sheet as it were. Well, we know what happened over 2 years ago the last time a UK chancellor attempted such a move and I do not think the markets will react well to similar effort this time around- all to be revealed as they say. Meantime the GBP/USD, which closed in the US last night at 1.3071, has traded a range so far today covered by 1.3063 to 1.3082. It is just now trading at 1.3077