Sterling edges down from 3 week high

Sterling edged down from a three-week high against the dollar on Thursday but traded just above $1.32, with worries over the economic impact of Britain’s vote to leave the European Union having eased a touch after better-than-expected data.
Though it was down half a percent on the day against the euro, the pound was on track for its best weekly performance in six weeks against the single currency, having hit a two-week high on Wednesday.
Short positions on sterling reached a record high of 94,238 contracts in the week to Aug. 16, and traders said many speculators had this week been unwinding those bets and booking profits, which helped lift the currency.
Friday’s second-quarter GDP data was being eyed for direction — though it only covers a week of the post-EU-referendum period, it should show how the UK economy held up during a time of heightened uncertainty.
Data released on Tuesday showed orders for British manufacturing exports hit a two-year peak in August.
“Although economic data from the UK economy has displayed signs of stability, consequently questioning if the Brexit had any negative impact, it remains quite early to come to a conclusion,” said FXTM analyst Lukman Otunuga. 
“Sterling still remains the worst performer among major currencies since the referendum.”
The pound edged down 0.2 percent to $1.3208, leaving it on track for an almost 1.5 percent weekly gain.
Sterling rose 1.2 percent last week after July inflation and retail sales numbers released beat forecasts, adding to signs that consumers have yet to rein in spending after the Brexit vote.
Sterling fell to a three-decade low of $1.2798 on July 8 and had been languishing near those troughs earlier this month on expectations that the Bank of England might have to ease monetary policy further in coming months.
The central bank cut rates to a record low on Aug. 4 and restarted an asset-buying program to cushion the economy from an expected post-Brexit slowdown. 
But after the slew of upbeat data, investors are reassessing the chances of further easing.
Against the euro, sterling lost 0.4 percent to trade at 85.51 pence, still close to the previous day’s high of 84.86 pence. That left it on track for around a 1.4 percent weekly rise.
“It’s not that bad! That’s the current sentiment for the pound,” wrote Commerzbank strategists in a note to clients.
“But watch out: the Brexit shock is still to come, as its effects will only gradually be reflected in the data, which will worsen over time.”

Source: Arab News