British pound rebounds from multimonth lows
The British pound (FXB) rose 0.29% against the US dollar (UUP) for the week that ended on June 1, closing at 1.34. The primary reason for the rebound in the pound was the rebound in risk appetite after the Italian government’s formation late last week. The weaker-than-expected data from the United States in the middle of the week furthered the recovery in the British pound.
British equity markets (BWX) posted their second weekly loss in ten weeks, reflecting the weak equity market sentiment in Europe, but gains in the later part of the week helped limit the slide. The FTSE 100 Index (EWU) fell 0.37% in the week that ended on June 1 and closed at 7,701.77.
Speculators decreased bullish positions
As per the latest Commitments of Traders report, which was released on June 1 by the Chicago Futures Trading Commission, speculators increased their overall bullish positions on the British pound (GBB) by 3,778 contracts last week. Total outstanding net long contracts increased from 5,701 contracts to 9,477 contracts as of May 29.
The week ahead for the British pound
This week, the rebound in the pound is likely to continue, as technical factors could limit the ascent of the US dollar. British construction and the UK services PMI (purchasing managers’ index) are due to be reported this week, and even a minor positive surprise could push the pound higher against the US dollar.
In the next article, we’ll analyze the slide in the Japanese yen last week.