FX round-up: Pound higher as speculators trim shorts

The pound was trading on the front foot at the start of the week, helped by news that speculators had pared their 'bearish' bets on 'cable', as traders call the exchange rate between the pound and the US dollar.

According to the latest weekly figures from the US Commodity Futures Trading Commission, speculative net bets against the pound-US dollar cross fell from 69,613 contracts to 61,179 over the week ending on 11 September.

Analysts at Rabobank attributed the move to "flickers of optimism" around the possibility of a Brexit deal between the UK and European Union being reached. Nevertheless, so called 'net shorts' remained at a very high level.

As of 1616 BST, cable was 0.58% higher to 1.16905, but up by just 0.05% against the euro at 1.1250.

Explaining the latter, the single currency was also making inroads against the Greenback, rising by 0.59% to 1.16933, helped by that same CFTC data.

Speculators moved further into the 'long' camp in euro/dollar, raising their net position from 7,963 contracts to 11,170, although that remained well below the 52-week high of 151,476.

Commenting on the technical outlook for euro/dollar, David Madden at CMC Markets UK said: "despite the decent bounce back between mid and late August, the market remains in the wider downward trend that began in April, and while it stays below the 1.1750 level, its outlook could remain bearish. 1.1510 might act as support and a break below that mark could bring 1.1300 into play. If 1.1750 is cleared, 1.1850 could be targeted."

Supporting the euro from the fundamental side of things were reports that the Italian government was set to stick to a "prudent" for their 2019 budget proposal.

From a bird's eye view, the US dollar spot index was down by 0.44% to 94.5060, accompanied by market commentary that was increasingly focused on the upcoming US central bank monetary policy meeting, on 25-26 September.

That weakness was despite reports that the US was set to levy tariffs on another $200.0bn-worth of Chinese-made goods, but of 10%, not of 20%.

Against the major emerging market currencies, the US dollar was mixed, gaining 2.26% versus the Turkish lira, but slipping by 0.16% against the Russian rouble, by 0.56% versus the Argentine peso and by 0.24% against the Brazilian real.

It was also down by 0.15% to 6.8570 yuan.