The pound traded around 0.2 percent from its weakest level in a month versus the U.S. dollar after hedge funds and other speculators cut their bullish bets on the U.K. currency to the lowest level since March.
The pound remained slightly unchanged at $1.6993 at 4:13 p.m. in London after earlier declining to $1.6962 on July 25, its lowest level since June 25. The sterling remained unchanged at 79.10 pence per euro.
“A lot of good news is baked in the cake as far as sterling is concerned,” said Ray Attrill, a Sydney-based global co-head of currency strategy at National Australia Bank Ltd, told Bloomberg. “For the time being at least it looks as if in a lot of those long positions in sterling there may be a rush for the exit.”
The number of U.K. companies that issued profit warnings in the first half surged the most since 2012 after the pound’s gain in 2014 affected profits, reported EY consulting firm. The pound has gained 11 percent over the last year, turning it into the best performing currency out of the 10 advanced-economy currencies monitored using Bloomberg Correlation-Weighted Indexes.
10-year gilt yields advanced 0.01 percentage point, or one basis percent, to 2.58 percent. The yield rate plunged to 2.54 percent on July 23, its weakest level since June 2.
Morgan Stanley’s analysts said last week’s decline offers investors a chance to purchase the sterling. Economists polled by Bloomberg forecast that consumer confidence touched its highest level since 2002 while manufacturing productivity hovered close to the highest level in seven months in July. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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