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Pound held at a 20-month low

The pound remained at a two-month low on Wednesday, weighted down by a broad-based rally in the dollar, fading hopes of a breakthrough in Brexit’s talks between the British government and the opposition.

The dollar index measuring the US currency against a basket of six main competitors, reached a 22-month high for a night.

British Prime Minister Theresa May told her top team of ministers on Tuesday that talks with the opposition Labour Party aimed at finding a way forward on Brexit are serious but difficult in some areas.

The pound edged 0.1% lower at $1.2920, its lowest level since Feb. 19. Versus the euro, the pound was broadly stable at 86.76 pence.

Some analysts see some reason for optimism, given that the deal with the EU to postpone Brexit at least until October has removed the imminent risk of Britain leaving the bloc without a deal.

“We are quite constructive about the outlook for the pound in the short term as a hard no-deal Brexit has been completely removed with the pound’s relative undervaluation becoming an attractive proposition,” said Nikolay Markov, a senior economist at Pictet Asset Management in London.

Last week’s data showed speculative net positions in pound, which turned out to be slightly in favor of retaining long positions on sterling for the first time since June 2018, according to data released by the US Commodity Futures Trading Commission.
The latest data also supported pound. Last week’s data showed that the volume of retail sales increased by almost two and a half years in annual terms, which is above market expectations.
Source: Reuters