Sterling rose on Thursday, remaining resilient in the face of persistent negative-rates risks flagged by markets as the Brexit overhang fades further into the past and pandemic challenges to growth haunt other major currencies.

Cable has fallen a scant 0.1% to 1.3650 so far in 2021, faring better than the EUR, down 0.77%, and the JPY's 0.71% slide. It is just 53 pips below its 2021 and 33-month high by 1.3703.

Though recurring expectations of negative BoE rates in 2021 remain a fixture of the interest rates futures landscape, the COVID concerns driving this sentiment are not UK-specific, in contrast to 2020's Brexit risks.

Sterling traders appear eager to replace long and profitable EUR and yen risks with sterling, which had lagged the broader market throughout drawn-out Brexit negotiations.

Though GBP/USD spec IMM positioning as of Jan 5 was a scant +3,665 contracts, well below IMM EUR long 142,991 and JPY 50,190, there were 31,861 short contracts, which were likely lightened as GBP/USD dipped to its 2021 low 1.3451 on Jan 12.

The shallow GBP dips in 2021, and subsequent recoveries near multi-year highs, hint at pent-up demand that may lift GBP/USD, putting it on a more even keel with other majors.
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