Interest rates are going up everywhere, hard and fast, and markets are finding it increasingly difficult to ignore the consequences.

The pound collapsed below the 1.24 mark versus the US dollar on Thursday, its lowest level since mid-2020, after some more muddled communications from the Bank of England.

The US dollar exhibited classic traits of a ‘buy the rumour, sell the fact’ reaction following Wednesday’s FOMC meeting, as we thought might be the case.

Most currencies have traded within relatively narrow ranges during the bank holiday shortened week so far, as investors await major central bank meetings in the coming days.

Expectations are high heading into the May FOMC meeting, which is expected to deliver the Fed’s first 50 basis point interest rate hike in more than two decades.

The sell-off in risk assets continued for another day on Wednesday, with concerns over global growth sending a host of currencies to multi-month or multi-year lows versus the US dollar.

Investor concerns surrounding a possible slowdown in global growth continued to dominate the narrative in the foreign exchange market on Tuesday, leading to further sell-offs in most risk currencies.

The key theme in financial markets on Monday was undoubtedly one of risk aversion, with concerns over global growth leading to sell-offs in risk assets at the expense of the traditional safe-havens.

The sell-off in US fixed income is now spreading to other markets, with European yields moving higher as the long-awaited (by us, at least) hawkish turn in ECB communications begins to take place.