An employee is seen walking over a mosaic of pound sterling symbols set in the floor of the front hall of the Bank of England in London, in this March 25, 2008 file photograph. Speculators cut their short positions against the pound in the week to August 23, according to the latest CFTC positioning data. — Reuters pic
LONDON, Aug 27 — The British pound rose slightly today as investors digested the latest Brexit developments, although sterling was below a three-week high as traders kept to their large short positions betting against the currency.
Prime Minister Boris Johnson said yesterday he was prepared to take Brexit talks with the European Union down to the last minute before the October 31 exit deadline.
Johnson’s foreign advisor, David Frost, will visit Brussels tomorrow to discuss alternatives to the Brexit withdrawal agreement, The Telegraph newspaper has reported.
Investors are growing increasingly concerned that Britain is headed towards a no-deal Brexit on October 31, although some also believe the currency had moved too far downwards.
Britain’s opposition Labour Party leader Jeremy Corbyn vowed to do “everything necessary” to stop a no-deal Brexit as he prepared to meet other lawmakers to discuss tactics to block the government’s plans. Many investors are skeptical about the opposition’s ability to stop Johnson.
Speculators cut their short positions against the pound in the week to August 23, according to the latest CFTC positioning data, although outstanding shorts — at US$7 billion (RM29.5 billion) — remain close to their highest level in more than two years.
“Sterling’s limited reaction to the trade tensions tells us the market’s focus is clearly on Brexit,” UBS global wealth management strategists said in a note today, referring to the trade conflict between the United States and China.
“If the global economic outlook turns sour, the Bank of England could have to change tack and join the global central bank easing bandwagon. Thus, we acknowledge that risks have risen of the pound appreciating somewhat less than we forecast.”
Sterling rose 0.2 per cent by 0810 GMT to US$1.2246 and 0.2 per cent against the euro to 90.725 pence. — Reuters
