Cable's sharp drop from its mid-April post-Brexit referendum high may restore the allure of UK gilts for foreign investors who have been dumping the bonds in recent months, which could in turn increase the potential for GBP/USD to rise towards 1.36 in June.
Data published Thursday showed foreign investors sold a net GBP 2.441 billion of gilts in April--a month when GBP/USD fell for the first April in 14 years, after selling a net GBP 3.972bn of gilts in March.
Foreign investors have sold a net GBP 4.052 billion gilts since the start of the year, despite buying a net GBP 11.613 billion of gilts in February--the biggest net purchase since November 2016.
Cable's slide from its mid-April high of 1.4377 extended to a six-month low of 1.3205 earlier this week.
The size of that drop should make gilts more attractive to foreign investors as the final month of Q2 looms as they will get more bang from their bucks.
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