Sterling rallies

Sterling rallied on Tuesday with a broad rebound in risk markets encouraging some selling of the dollar, while traders awaited news on British Prime Minister Boris Johnson, who is stable in intensive care as he battles COVID-19 symptoms.
Johnson, 55, was moved into intensive care late on Monday after his condition deteriorated rapidly over the preceding 24 hours. His foreign minister is deputizing for him to lead the government's response to the outbreak.
Analysts said that while news of Johnson's condition was clearly a concern, beyond a short-lived dip in Asian hours it had not yet moved the pound because it was unlikely to mean a change in the government's policy direction to fight the virus.
"Certainly, losing the head of government is not going to inject 'confidence' into the FX market, but government policy in a non-presidential system is ultimately crafted by the PM and his/her close advisers," said Stephen Gallo, head of European FX strategy at BMO Capital Markets.
Against the dollar, sterling extended its overnight gains in London, rising more than 1.2% to as high as $1.2383 before settling at $1.2321. Sterling fell to as low as $1.1413 - its weakest since 1985. Against the euro, sterling did far less well and was down 0.2% at 88.38 pence.
In a sign of a healthy appetite for British assets, government bonds attracted their strongest investor demand since 2005. Britain held two bond auctions in a day for the first time and aims to sell a record 45 billion pounds ($55 billion) of government bonds this month.