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London - Investors’ concern about political shifts is benefiting the pound.
Sterling has climbed against all of its 31 major peers since lasts Friday. It’s the surprise winner during the week of Donald Trump’s electoral upset in the US that threw markets into turmoil as traders reappraised populist movements. Traders reduced their short bets against the pound as they wait for a Supreme Court hearing scheduled for December 5 to December 8 that potentially may delay Britain’s exit from the European Union.
The UK currency headed for its best week against the euro since July 2015 as investors tried to assess how the rise of populism may affect the euro, with several countries in the region facing votes in the coming months, and how trade flows may shift if Trump were to move ahead with protectionist policies.
“There is just a bigger theme now and we just don’t have a trigger for more pound downside here,” said Manuel Oliveri, a currency strategist at Credit Agricole SA’s corporate- and investment-banking unit in London.
“Hard-Brexit fears were falling already, and you have a market that is positioned one-sided. When there’s no more impulse, these positions get taken off at some point.”
Sterling climbed 0.2% to $1.2584 as of 10:33, and was headed for its second week of gains versus the greenback. It strengthened 0.3% to 86.51 pence per euro, set for a 2.9% increase against the single currency in the week.
Short-pound positions, or bets that the currency will fall, started to recede this month, after reaching a record-high level in October, according to Commodity Futures Trading Commission data from the week ended November 1.
The pound completed its best week against the dollar since 2009 on November 4, amid speculation Brexit will be delayed or watered down after a court ruled the government can’t start the process of leaving the EU without a vote from lawmakers.
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