US exceptionalism is back in the dollar trade, and the BoE is watching today's inflation print carefully

Speculative long-dollar positioning has hit its most bullish level since February 2025, driven by a US economy that keeps refusing to slow on schedule: firm retail control-group sales, sticky core inflation, and a Federal Reserve with no obvious urgency to cut. The consensus earlier in the year that US rates would converge downward toward global peers has been cleanly reversed, and a 13-week buying streak in USD futures and options now reflects a structural repricing of the rate differential rather than tactical positioning. UK assets are holding steady ahead of today's inflation print: if services inflation and wage growth are still running hot, the Bank of England's first cut stays out of reach, sterling gets a mild technical lift, but gilts reprice higher at the short end. The broader FT Global Bond Summit consensus that '3% is the new 2%' for neutral rates has real implications for any UK business that financed growth on the assumption that pre-pandemic rate norms would return. They are not coming back.