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Sterling set to rise for 3rd week as charts support
November 24, 2017 / 10:27 AM / 19 days ago

Sterling set to rise for 3rd week as charts support

* Graphic: sterling and gilt yields bit.ly/2dgAXn1

* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh

* Graphic: Trade-weighted sterling since Brexit vote tmsnrt.rs/2hwV9Hv

By Saikat Chatterjee

LONDON, Nov 24 (Reuters) - Sterling edged higher on Friday and is poised to post gains for a third consecutive week as markets interpreted latest comments from top EU policymakers as mildly positive for Brexit negotiations though gains were capped.

With general dollar weakness across the board in a week shortened by holidays in the United States and Japan, the British pound rose 0.2 percent to $1.3327 and closing in on key technical levels.

Sterling posted some chunky gains against the Japanese yen and the Swiss franc rising 0.4 percent.

“EU Juncker’s comments today was taken as a sign that negotiations with the EU were progressing to the next stage but markets are not ready to take big bets yet as the asymmetric bets are large,” said Thu Lan Nguyen, analyst at Commerzbank.

The president of the European Commission Jean-Claude Juncker said on Friday that a meeting with British Prime Minister Theresa May on December 4 will allow the EU to see whether sufficient progress was made on Brexit talks.

Sterling is flirting with some pretty key levels on the charts as well against the dollar.

If it breaks above the $1.3330 line, which it has tried three times earlier over the last few weeks but has been unsuccessful it can quickly rally up to the late September highs of $1.3347 and beyond.

The recent rise in sterling hasn’t been accompanied by a rapid build up in positions, indicating that investors were still underweight on the British currency.

“We are near some very important technical levels on sterling here,” said John Marley, head of FX strategy at Infinity International, a currency risk management firm.

The dollar hit a five-week low against a basket of currencies, with trade thinned this week due to the North American Thanksgiving holiday on Thursday, which was also a national holiday in Japan. (Reporting by Saikat Chatterjee; Editing by Raissa Kasolowsky)

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