U.S. pound falls as global risk appetite takes effect


LONDON, Aug 16 - The British pound has slipped in early trading on Monday, hurt by a drop in risk appetite worldwide, after economic data from the United States and China prompted fears about their recovery from COVID - 19.

Data released on Friday showing a sharp drop in U.S. consumer confidence and data released on Monday showing a weakening of Chinese factory output and retail sales growth spooked investors, pausing the 10-day winning streak in European stocks.

The dollar lost money with higher and riskier currencies leading the losses.

The pound was down 0.1% against the dollar at 0757 GMT. Is the euro a little changed than expected, at 85.035 pence per EUR.

As well as being driven by shifts in domestic risk appetite, a busy week of global data is also expected to affect the pound. Focus is on the UK labour market report on Tuesday, inflation data for July on Wednesday and retail sales data on Friday.

Earlier in August, the Bank of England set out plans for how it would start to scrap its massive bond buying programme.

Since then, the pound has generally weakened versus the dollar but had fallen slightly against the Euro, as the European Central Bank is not expected to tighten policy as soon as the BoE.

Recent hawkish tilt by the Bank of England has given the pound an added buoyancy recently and some decent numbers this week could act as tailwind for GBP bulls after recent weakness, said Michael Hewson, chief market analyst at CMC Markets, in a note to clients.

ING strategists wrote in a client note that investors will be looking for how the data this week compares to the BoE's upbeat growth outlook for the UK.

EUR GBP may face bearish pressure if UK data are still favorable for the pound and move below 0.8500, ING said.

Long position on the pound generated a "turn-net" position in the week to Aug. 10 according to weekly CFTC positioning data. This means that the speculative market expects the pound to generally strengthen.