British Pound Loosens Against Dollar, UK Reopened Under Consideration – Global Banking & Finance Review

By Ritvik Carvalho

LONDON (Reuters) – The British pound eased against the significantly stronger dollar on Tuesday, without the release of important data on the economic calendar, leaving analysts focused on the UK government’s next move to fully reopen the economy.

The pound has been trading in a consolidation pattern against the dollar for three weeks now, ranging widely between $ 1.41 and $ 42. Analysts say its recent moves have been largely dollar-induced, as strong economic data coming into the United States has left investors nervous about a possible Federal Reserve tightening.

As of 08:17 GMT, the British pound was 0.3% lower against the dollar at $ 1.4135. Against the euro, it fell 0.2% to 86.10 pence.

The British pound is the second best performing G10 currency against the dollar this year, behind the commodity-focused Canadian dollar, and has been propelled by bets on a faster reopening of the UK economy thanks to its program vaccination.

(Graphic: Currency and vaccination rates)

Those hopes have faded somewhat in recent weeks, however, as the increase in cases of the Delta variant of COVID-19 first detected in India has led to calls from some scientists to push back the reopening date.

Health Minister Matt Hancock said on Sunday it was “too early” to say whether the June 21 plan could go forward.

“There is no real release of data on market developments this week in the UK, and expectations ahead of the government’s June 14 announcement on whether to move forward with a Further easing of Covid-19 restrictions on June 21 could remain the main theme to watch, ”ING strategists said in a note.

“Nonetheless, we doubt that a potential delay in the full reopening could materially weigh on the pound sterling.”

ING also observed in a note on Monday that the weekly volatility of the pound’s positioning has not been accompanied by oversized movements in the spot market, suggesting that the fluctuations may be more related to technical reporting details than ‘real changes in market sentiment for the currency.

Speculators reduced their net dollar short positions last week, according to Reuters calculations and data from the Commodity Futures Trading Commission released on Friday. [CFTC/] [IMM/FX] However, the overall positioning in the British pound remains net long, which means that the market as a whole is betting for it to make gains.

UK retailers reported a sharp increase in sales in May, after lockdowns ended the previous month and an easing of COVID restrictions on hospitality drew more shoppers to city centers, said industry data showed Tuesday.

The British Retail Consortium said total sales for its members, which include supermarkets and chain stores, were 10.0% higher last month than in May two years ago.

(Reporting by Ritvik Carvalho; Editing by Raissa Kasolowsky)

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