Dealers are blaming short-covering in GBP/JPY for the underlying bid in cable as the European session draws to a close. Concerns over the UK’s ability to service its growing debt have undermined the pound dramatically this week, weakening the pound to the point where specs fear a sharp rebound.
Yesterday’s comments from French finance minister Lagarde that the BOE was not doing enough to support the pound helped raises those fears by a significant degree, turning some of the specs from sellers on rallies to buyers now on dips.
Cable trades now at 1.3835 after finding intraday resistance in the 1.3860s.