© Reuters. UK pound coins plunge into water coloured with the European Union flag colours in this illustration picture

By Joice Alves

LONDON (Reuters) – Sterling rose 0.2% against a slightly stronger dollar on Monday ahead of UK unemployment and GDP data this week after hitting its biggest daily fall since June against the greenback on Friday.

Sterling resumed its role as a risk-driven currency on Friday, with a sharp fall against the dollar as global investors sentiment turned sour amid more friction between China and the United States.

The British currency rose 0.2% $1.3053 at 0900 GMT on Monday against a slightly stronger dollar with investors also focusing on fiscal stimulus in the United States.

Versus the euro, sterling gained 0.2% at 90.05 pence per euro ().

The pound was still below a five-month high of $1.3185 touched last week when it rose to a five-month high on Thursday as the Bank of England struck a less pessimistic tone about the coronavirus-battered British economy.

ING analysts said it is not the case of being too optimistic on sterling as consensus expects a rise in the June unemployment rate from 3.9% to 4.2%.

“GBP could not hold on to last Thursday’s BoE (Bank of England)-inspired gains and instead is consolidating ahead of key employment data released tomorrow,” analysts at ING wrote in a note.

“We prefer not to chase the story of upside surprises in UK activity nor a stronger GBP”.

Speculators’ net short position on the pound got smaller in the week to August 4, weekly CFTC positioning data showed .

“Speculators are still short GBP and while a short squeeze is still possible, we prefer not to chase the story of upside surprises in UK activity nor a stronger GBP,” the ING analysts added.

Britain’s finance minister Rishi Sunak said on Friday that extending a furlough scheme which is due to expire at the end of October would leave some workers trapped in the false hope that they could return to their jobs after the pandemic.

UK second-quarter GDP data is also due this week.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source link