Recent risk driven recovery stretched to......>

CABLE: Recent risk driven recovery stretched to $1.2615 in post fix trade before

momentum faded and rate drifted off to $1.2570 into the close. Consolidation in

early Asia saw rate contained within a relatively tight range of $1.2569/82.

Tokyo open saw interest to sell GBP/JPY emerge which pressed cable down to

$1.2531 before rate steadied around $1.2540 through to the European open.

Sterling has benefited from the recent risk appetite, driven by equity market

gains as traders react to the easing of global COVID-19 lock downs. However, any

stalling in this outlook will expose underlying potential sterling negatives,

current UK/EU negotiations over post Brexit relations, BOE warning banks to

prepare for a disorderly Brexit at the end of the year, as well as several BOE

officials' comments leaving the door open to negative interest rates if needed

to boost the UK economy. Support $1.2530, $1.2500, $1.2480. Resistance

$1.2580/85, $1.2605/15.

- UK Construction PMI provides domestic data interest. Focus on ECB Monetary

Policy announcement (1245BST/presser 1330BST); US Trade, Weekly Jobless Claims

at 1330BST. US data improvements tend to favour risk.