The increasing bearish sentiment in US rates is not only a negative backdrop for EM, it also erodes gains in other G10 currencies from the perspective of yield differentials. The German-US 2y yield differential has been joined at the hip with EUR/USD price action since last year. Both markets are currently trending lower, and EUR/GBP is dropping toward its June lows on relatively strong volume. The risk is for weakness to extend, and we are monitoring short-term support areas for a break lower to confirm a resumption of weakness.
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Barclays