- Investors `position-squaring' before holidays: ING's Krpata
- Currency had been falling with `Brexit' vote 3 months away
The pound rallied from a 15-month low against the euro and rose versus the dollar as investors prepared for the U.K.’s four-day Easter holiday and as data showed retail sales fell less than predicted in February.
“We’re seeing some position-squaring” before the long weekend, but the moves are a “small reversal” of this week’s declines and are unlikely to be sustained, said Petr Krpata, a London-based foreign-exchange strategist at ING Groep NV. The pound’s recovery is mostly because of the sales data, he said.
Sterling had been falling every day this week against both currencies as traders focused on the June 23 referendum on Britain’s membership of the European Union and the potential damage to growth and investment should people vote to leave. The 0.4 percent decline in store sales was less than the 0.7 percent drop forecast by economists in a Bloomberg survey.
The U.K. currency rose 0.2 percent to $1.4150 as of 4:40 p.m. London time, reducing its loss this week to 2.3 percent -- the first weekly slide since February. The pound gained 0.4 percent to 78.93 pence per euro, after touching 79.47 pence, the weakest since December 2014.
“We’re not far from the psychological level of 80 in euro-sterling, and sooner or later it will be tested if we have some ‘Brexit’-negative news,” Krpata said. The last time the pound was that weak was also at the end of 2014.