Doubts on rate rise timing begin to turn tide for sterling
Published on Aug 13, 2014 12:50 AM
LONDON (REUTERS) - Over five tough summer weeks investors have slashed their bets on a stronger pound by 75 per cent as still-miserly earnings growth calls into the question the timing of the first UK interest rate rises in over seven years.
Sterling's retreat - around 2.3 per cent, or almost 4 cents, against the dollar since early July - has come chiefly via a rebound for the US currency. But UK data, albeit only slightly weaker, has also had an impact, casting at least some doubt on once-popular bets that rates would rise this year.
CFTC data shows speculative investors have cut net long positions in sterling from more than 52,000 contracts in late June to just over 12,000 in the first week of August.
The Bank of England (BoE) has said little to bolster expectations rates will rise this year and even if minutes from its most recent monetary policy meeting later this month reveal the first vote for an immediate hike, money markets are only pricing in a small chance of higher rates by the end of the year.
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