LONDON, Sept 19 Sterling rose against a weaker
dollar on Monday, although gains are still likely to be held in
check by concerns about the uncertainty generated by Britain's
vote to leave the European Union and expectations of more
interest rate cuts in coming months.
The Bank of England kept rates at record lows on Thursday
but signalled that it would cut them again before the end of the
year. It cut rates to 0.25 percent in early August and
relaunched an asset-purchase programme to cushion the economic
blow from Brexit.
Traders said sterling's weakness accelerated late last week
on a media report that UK Chancellor of the Exchequer Phillip
Hammond was ready to give up access to the single market to
achieve immigration restrictions during the Brexit negotiations.
"There are increasing forces within the government pressing
for a hard exit putting immigration ahead of EU market access,"
said Hans Redeker, head of currency strategy at Morgan Stanley.
"Things look increasingly messy and with the UK government
not defining a clear position concerning its exit strategy
uncertainties will remain high. What matters for sterling is the
medium-term investment outlook and here the outlook is
A survey by Lloyds Bank showed on Monday that British
companies scaled back their investment plans in the month after
Britain voted to leave the European Union.
Sterling rose 0.4 percent to $1.3058, having hit a
one-month low of $1.2999 early on Monday. On Friday it lost 1.8
percent and it shed 2 percent for the week as a whole, its worst
weekly performance since early July.
The dollar was 0.2 percent lower, giving up some of
the robust gains it made on Friday with investors cautious
before the Federal Reserve meeting this week.
The pound was also up 0.35 percent against the euro at 85.45
pence per euro, having dropped to three-week low
earlier on Monday.
Meanwhile, latest data from Commodity Futures Trading
Commission showed that speculators trimmed bets against the
British pound in the week to Sept 13.
Their cutting of unfavourable bets saw the pound hit a
seven-week high of $1.3445 on Sept 6, more than 5
percent above the three-decade low plumbed in July soon after
the EU referendum. But since then, with Governor Mark Carney
leaving the door open to more easing, sterling has shed ground.
"The pound has been left open to selling in recent days
after the BoE strongly indicated that the Monetary Policy
Committee would not hesitate to cut interest rates once again if
the UK economic outlook deteriorates in the final months of
2016," said Jameel Ahmad, chief market analyst at FXTM.
(Reporting by Anirban Nag; Editing by)