Pound continues to fall as short-sterling yields are plunging
Short-sterling yields are falling across the board indicating as an indication that BOE rate hike bets are receding but it's more to do with the fact that Raab's resignation has thrown a bout of uncertainty to the whole Brexit saga.
Will there be more resignations to follow? Has May's position as prime minister been compromised? What happens now when the meaningful vote gets rejected? Disorderly Brexit? Second referendum? General election? All those outcomes are terrible for the pound and the BOE.
As a result, the pound has been brought lower across the board. 2-year Gilt yields have fallen by 9 bps to its lowest in three months now and the decline in UK yields is adding to more pain for the quid today.
With cable now breaking below 1.2900 as well, a break of the Monday low @ 1.2828 will see price threaten a break of the September low @ 1.2786. But this kind of fall looks to have the potential backing to move towards the year's low at 1.2662 at the very least.
