Cable trades at 1.2750
The UK is at the confluence of trends in the virus and central banking.
Looming new restrictions have added to the Brexit angst around the currency and talk of negative rates have weighed. Bank of England Governor Andrew Bailey tried to walk back negative rate talk today.
Yes it's in the tool bag, but that does not imply anything about the probability of us using negative interest rates at the moment," he said.
That led to a quick rally in GBP/USD to as high as 1.2867 from a low of 1.2713. That's some good volatility.
But the market is still skeptical and cable has fallen back to 1.2744. Some of that is general USD strength but the bulk of it is GBP weakness.
Notably though, gilts are sending a message that negative rates are less likely. Yields have risen to -0.07% from -0.13% at the start of the day. A rise above 0.04% would be the highest this month.
As for cable, you can see the uncertainty in the chart today. It looked to be breaking down on virus and economic closing fears but it's back above the September lows.
