Sterling rises above US$1.32 as speculators trim unfavourable bets

[LONDON] Sterling hit a three-week high against the US dollar on Tuesday, rising above US$1.32 as speculators cut hefty short bets made against it amid little new domestic economic data or political developments.

Data released by the Commodity Futures Trading Commission on Friday showed positioning is stretched, with sterling net short positions soaring to a record high of 94,238 contracts in the week to Aug 16. Traders said some speculators were unwinding bets made earlier and booking profits.

"There is a short squeeze happening. Stop-loss orders above US$1.32 have just been taken out. But we think this rise is temporary and should stall around US$1.33/34," said a trader.

Sterling rose as much as half a per cent to hit US$1.3210 , its highest since Aug 4, and it also rose 0.2 per cent against the euro to hit 85.915 pence, its strongest in 11 days.

The pound was boosted last week by inflation and retail sales numbers for July that beat forecasts, adding to signs there has been little immediate impact on consumers from the Brexit vote. Better-than-expected jobless claims data also lifted the currency.

REUTERS