Soft demand for a 30-year Gilt auction today helped drive UK rates a little higher overall. The 30Y yield reached the highest since 1998 while 10Y yields touched the highest since 2023, Scotiabank’s Chief FX Strategist Shaun Osborne notes.  

GBP/USD firmer in mid-1.25s

“Relatively firm UK yields should be providing the GBP with a little more support than has been apparent in recent weeks. Even at the short end of the curve, 1Y swap spreads have narrowed notably since November while the pound has retained a soft undertone against the generally firm USD.”

“Sterling is also showing some promising technical signs on the weekly chart but, like the EUR, it is still trading below near-term resistance at 1.2610. A clear push through the low 1.26s should bolster near-term upside potential towards 1.27, at least. Support is 1.2500/10.”