Insider Economy Sterling rebounds after selloff though outlook cautious

Sterling rebounds after selloff though outlook cautious

Sterling rebounded on Tuesday as markets worrying about the spread of coronavirus found some stability, encouraging investors to pare back their rush into dollars that had sent the British currency lower.

Traders of the pound will also be watching for developments in Brussels and London ahead of the European Union and Britain beginning their negotiations to agree a trade deal for the end of a Brexit transition period in December 2020.

On Tuesday, however, the main driver of the pound was a tentative recovery in risk appetite following Monday’s significant selloff.

European and U.S. stocks had suffered their biggest loses since mid-2016 amid fears the coronavirus was developing into a pandemic that could cripple global supply chains and wreak far greater economic damage than first thought.

That sent investors clambering for the safety of the dollar, the world’s most liquid currency. Most other currencies were hit, and sterling fell to as low as $1.2887.

But the pound had rallied back towards $1.30, and was last up 0.5% at $1.2991. Against the euro sterling also rose, up 0.6% at 83.41 pence.

The pound has been supported this month thanks to signs of a rebound in the British economy and on expectations a new finance minister will raise public spending at next month’s budget.

Latest figures show funds have ramped up long positions in the pound to near two-year highs. Those net positions look large in relation to recent market moves, but they remain a long way from 2018 highs, suggesting there is more room for gains.

With little in the way of new economic data, investors are also focused on EU and UK relations ahead of both sides starting trade negotiations.

RBC Capital Markets Global Head of FX Strategy Elsa Lignos said media reports pointing out EU and British differences over their negotiation mandates showed that “the two sides are far apart as a starting point and it remains to be seen how much progress they can make in the remaining nine months”.

(Reuters)

Top Stories

France recalls ambassador to Ankara over Erdogan comments

  France condemned Turkish President Recep Tayyip Erdoğan’s remarks questioning the mental health of President Macron and recalled its ambassador to Ankara for consultations. The French...

130 cases today, most from private initiative-28 patients in hospital

  One hundred and thirty new Covid-19 cases were announced today, out of 4 thousand 285 tests, taking the total number of confirmed patients to...

Greece approaches four-digit covid cases, 935 today

  The second coronavirus wave is climaxing in Greece as it recorded 935 cases today, the highest number since the second wave begun gathering pace...

Erdogan says Macron needs ‘mental treatment’ over attitude to Muslims

  Turkish President Tayyip Erdogan launched yet another scathing tirade of insults on his French counterpart Emmanuel Macron, saying he needed mental treatment over his...

We are independent, Michaelides tells AG over golden passports

  We are not under anyone's custodianship, the Auditor General Odysseas Michaelides told Attorney General Yiorgos Savvides, who earlier called on his office to stay...

Taste

Squash soup

Ingredients: 1 kg pumpkin, cut into small cubes, approximately 5 cups 2 medium (400g) sweet potatoes, cut into cubes, approximately 2 ½ cups 1 chopped leek, only...

Mezedes

No visit to Cyprus is complete without enjoying the traditional meal of many small dishes known as ‘meze’. This large feast, which has been a...

Prawns with fried cheese, barley shaped pasta

Put the barley shaped pasta into a small pan with salted water, bring to a boil and when tender, drain. Peal the prawns leaving...

Salmon and shrimp sheftalies

Mix all ingredients for tabbouli in a bowl and keep to one side so flavours can combine. Prepare the sheftalies: wash and soak the casing...