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UPDATE 1-Sterling rises as dollar falls amid thin August trading

Fri, 14th Aug 2020 14:05

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

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

By Olga Cotaga

LONDON, Aug 14 (Reuters) - The pound rose on Friday as the
dollar fell amid thin August trading, keeping most investors on
the sidelines from making directional decisions on the British
currency.

Sterling inched up 0.4% at $1.3128 and at 90.05
pence against the euro. It has risen nearly 7% in
the last three months against the U.S. dollar, almost
exclusively on the back of the greenback weakening.

The dollar gave back more of its power on Friday after U.S.
retail sales in July increased less than expected.

The dollar was last down 0.4% versus the Japanese yen at
106.56, though it remained flat versus the euro.

"It's summer markets, nothing is going to happen, it's all
about the bond market at the moment," said Kenneth Broux, head
of corporate research at Societe Generale.

Borrowing costs in Europe have tracked U.S. Treasuries this
week, which have been driven to new highs by a deluge of debt
issuance in the United States.

Next week, Britain releases inflation data on Wednesday and
retail sales on Friday, with both expected to be lower. Marshall
Gittler, head of investment research at BDSwiss Group, said
weaker data could make "further loosening more likely" by the
Bank of England.

Novel coronavirus cases are rising in some parts of the
world, which has prompted the British government to impose
quarantine on many tourists returning from holidays.

Late on Thursday, it announced that it would require
arrivals from France, the Netherlands and Malta to quarantine
from 0300 GMT on Saturday because infection rates there were too
high, dealing a new blow to the travel industry.

The UK can ill afford another coronavirus-induced slump
after posting a 20% drop in second-quarter GDP. In October it is
due to end a furlough scheme that has allowed millions to retain
their jobs.

Prime Minister Boris Johnson has ordered the reopening of
the economy in England to resume, saying a rise in infections
that prompted caution two weeks ago had now levelled off, and
warned of harsher punishment for those who breach the remaining
restrictions.
(Reporting by Olga Cotaga; Editing by Kevin Liffey)

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