UK pound rises against dollar as global markets jitters


LONDON, Aug 16 - The British pound edged higher against the dollar and held higher against the euro on Monday with risk appetite in global markets weak after economic data from the United States and China stirred concerns about their recovery from COVID - 19.

Data on Friday showing a drop in U.S. consumer confidence and data on Monday showing a sharp decrease in China's factory output and retail sales growth spooked investors, pausing the 10-day losing streak in European stocks.

The dollar edged higher and riskier currencies generally lost out, with the Australian dollar leading the losses.

The pound was more resilient. At 1134 GMT, it was little changed against dollar, at $1.387. the Euro sterling was up 0.2% after the 84.88 pence being quoted.

Against the safe-haven Japanese dollar, the pound was down 0.4% and touched its low in two weeks.

As well as being driven by shifts in domestic risk appetite, a busy week for 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.

In August the Bank of England set out plans for how it would start to end its massive bond-buying program.

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

The recent hawkish tilt by the Bank of England has given the pound another buoyancy recently and some decent numbers this week could act as tailwind for GBP bulls after recent weakness, Michael Hewson, chief market analyst at CMC Markets, said 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 well find fresh bearish pressure if UK data continue to move the pound up and over 0.8500, ING said.

The CFTC's position on the pound turned long in the week to Aug. 10, according to the weekly speculative position data. This means that the speculative market generally expects the pound to strengthen.