Sterling steadies vs. dollar, set for first weekly loss in five



© Reuters. FILE PHOTO: British Pound Sterling banknotes are seen at the Money Service Austria company’s headquarters in Vienna, Austria, November 16, 2017. REUTERS/Leonhard Foeger/File photo

By Ritvik Carvalho

LONDON (Reuters) – Sterling steadied against the dollar on Friday, making up some of its previous day’s losses although the currency was set for its first week of losses in five due to a broadly strengthening dollar over the past week.

A string of strong economic data releases from the United States has boosted the – which measures the greenback against a basket of currencies – this week to its highest level since mid-May.

The gains for the buck come as investors expect the Federal Reserve may respond to the economy heating up and move towards tightening policy sooner than expected.

The pound, which is the second best-performing G10 currency against the dollar year-to-date, has also suffered in recent days on worries that a new coronavirus variant spreading across Britain may affect plans to continue reopening the economy.

The government will review plans on June 14 to fully open the economy.

Sterling has been among the top-performing G10 currencies this year, at one point in the lead, as bets for a quick reopening of Britain’s economy on the back of the country’s vaccination programme.

Speculator positioning is still directionally net “long” the pound, which means that the market is betting on future gains for the currency against the dollar.

Strategists at ING remained broadly positive on sterling’s prospects despite the newsflow.

“We doubt the decision on 14 June whether to fully open up the UK economy will have a material impact on the GBP outlook,” they said in a note to clients.

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“We feel there is good momentum behind the economy right now – enough to support the BoE’s (Bank of England’s) reasonably bullish set of forecasts and probably maintain expectations that the BoE could tighten before the Fed in 2H22.”

By 0805 GMT, sterling was 0.2% higher to the dollar at $1.4117 and set for a weekly loss of 0.4%.

It was 0.3% lower to the euro at 85.79 pence, with a weekly gain of 0.3% to the single currency.

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