LONDON : Sterling inched up on Friday,
trimming early gains as investors took profits after the European Union
repeated an early December deadline for Prime Minister Theresa May to move on
Britain's Brexit divorce bill.
European Council President Donald Tusk
increased the pressure on May to make progress in time for the EU to respond at
a summit on Dec. 14-15, or risk losing a chance to push the talks to a
discussion of future trade ties -- something London desperately wants so it can
offer some certainty to nervy businesses.
Sterling rose half a percent early on to hit
a 2-1/2 week high of $1.3260 amid broad dollar weakness. But the pound gave up
most of the gains to stand 0.1 percent higher on the day at $1.3203.
It is set to rise for a second consecutive
week.
"Traders don't want to carry any long
sterling positions into the weekend due to headline risks around Brexit,"
said a trader at a U.S. bank in London.
With Britain's autumn budget due next week,
markets will trade in broad ranges.
Capital Economics said in a note that
flexibility to offer fiscal giveaways was very limited due to a struggling
economy.
The dollar slipped to a four-week low against
the yen on Friday, after a newspaper report that investigators probing possible
Russian interference in the 2016 U.S. election had subpoenaed officials of
President Donald Trump's election campaign for documents.
Sterling's tiny gains were also accompanied
by a pick-up in implied volatility, a gauge for expected price swings, in the
derivatives market indicating the currency remained very sensitive to Brexit
headline risk.
Progress between European and British
negotiators at the December summit in Brussels is seen as an important
milestone in the Brexit talks, as businesses seek clarity on the terms of the
divorce by the new year, when many will make investment decisions.
Data this past week offered hardly any
support to sterling.
UK consumer price inflation was at 3.0
percent in October, lagging expectations, while the number of people in work in
Britain fell by the most in more than two years in the three months to
September.
Both indicators would support the view that
further interest rate rises by the Bank of England would come at a slow pace.
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