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Pound erases losses as U.S. data boosts risk appetite

Thu, 16th Jul 2020 15:45

* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

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

LONDON, July 16 - The British pound erased its early losses
on Thursday as risk appetite was boosted after U.S. retail sales
data topped estimates, although fears of a surge in coronavirus
infection rates capped its gains.

The U.S. Commerce Department's report showed retail sales
jumped 7.5% last month compared with economists' forecast of 5%,
suggesting the economy was continuing to pull out of a
coronavirus-driven slump.

Against the dollar, the pound was trading broadly
steady after falling as much as 0.5% to 1.2520 earlier in the
session after data showed the slide in Britain's jobs market
eased in June.

"We still believe going forward the UK faces issues and
think the economy will fare worse than others in Europe," said
Rony Nehme, chief market analyst at financial research firm
Squared Financial.

The number of employees on company payrolls fell by 649,000
from March to June, but the largest declines came at the start
of the lockdown, the Office for National Statistics said on
Thursday. The number of people on payrolls fell by
more than 74,400 in June, compared with 124,000 the previous
month and April's 450,000 plunge.

With British gross domestic product data for May rising less
than expected, investors are questioning whether the fiscal
stimulus measures already announced will be enough to prop up
the economy.

Speculators are shorting the pound. The latest CFTC
positioning data showed that leveraged funds held $1.28 billion
in shorts, though the amount had declined in recent weeks and
was not as high as around the same time last year.

The pound also weakened against the euro,
falling 0.2% to 90.84 pence after European Central Bank
President Christine Lagarde struck a cautious tone on the
outlook for the euro zone economy.
(Reporting by Saikat Chatterjee; Editing by Larry King and Hugh

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