Sterling Catches Bid

Sterling has been the best performer in G10 space as trading in Tokyo got underway, with BBG trader sources flagging interbank buying of GBP/USD by Japanese banks, which spurred short-stop squeeze amid low liquidity. This played out as participants were digesting UK political developments from over the weekend, which came on the heels of last week's "Super Thursday" elections.

• GBP/USD has surged 48 pips so far and sits at $1.4033 as we type, printing best levels since Feb 25. Bulls look for further gains towards Feb 24 high of $1.4237, a multi-year peak. Bears see the 50-DMA/May 6 low at $1.3861/58 as their initial target.
• GBP/JPY trades at Y152.51, 65 pips better off at typing. The rate has punched through Apr 29 high of Y152.41, which had capped gains initially, and focus now moves to Apr 6 cycle high of Y153.41. Bears look for a fall through May 6 low/50-DMA at Y151.26/150.98.
• The SNP failed to win an outright majority in Scotland's devolved parliament, but were comfortably the best performer and are set to join ranks with pro-independence Scottish Greens in pushing for separation from the rest of the UK.
• Elsewhere, Labour's Khan won re-election as the Mayor of London, albeit by a thinner margin than polling had suggested. Meanwhile, the Tories continued to make inroads into former Labour strongholds in the North, prompting Labour leader Starmer to reshuffle his team.
• UK data docket this week features flash Q1 GDP & monthly economic activity indicators, due Wednesday. BoE's Bailey, Cunliffe & Breeden will speak this week.