Sterling reversed gains and headed for the day's lows on Friday as the dollar's gains prompted investors to take profits after a boost from officials saying Brexit negotiations will move to the next stage in January. The European Union agree to move talks forward with London on Britain's exit from the bloc, but there was little clarity on trade issues and Austria warned the Irish border issue remained a "riddle".
But with US stock futures pointing higher and the dollar scoring some gains agaisn the Swedish Krone and the Australian dollar, investors were quick to take profits on long sterling trades. "This seems to be so much of a "buy the rumour, sell the fact story in sterling," said John Marley, head of FX strategy at Infinity International, a currency risk management firm.
Sterling reversed gains and fell 0.4 percent on the day at $1.3373 and nearing a two-week low of $1.3305 hit earlier this week. Against the euro, the British pound fell 0.5 percent 88.20 pence per euro. With little support from the Bank of England (BoE), which on Thursday stuck to its view that interest rates were likely to rise only gradually despite above-target inflation, the key drivers for sterling are likely to be Brexit-related. The BoE said in a statement that last week's breakthrough in Brexit talks had reduced the risk of Britain leaving the EU in a disorderly way and might boost economic confidence.
Investors have turned slowly bullish on sterling in recent weeks, with net positioning data showing a gradual increase in long British pound bets, though any disappointment over Brexit negotiations may see sterling skid sharply lower.
Comments
Comments are closed for this article.