The British pound is higher against the euro on Tuesday.
- CFTC shows highest net long position in euro on record
- Post-Brexit talks resume today
- News of China coronavirus vaccine lifts sentiment
- Weakness in the dollar lifts both Sterling and euro
GBP/EUR was higher by 32 pips (+0.29%) to 1.1069 as of 8am GMT. The gains put the pound-euro exchange rate slightly higher for the week at +0.14%.
The currency pair jumped in early trading to test highs of the week near 1.107 having closed slightly lowest yesterday.
GBP: Brexit talks resume today
News of China readying its own coronavirus vaccine lifted sentiment, pulling the US dollar as a haven lower again.
The pound and euro both got a lift against the US dollar, with the pound slightly ahead since it was playing some catch-up from a small drop yesterday. There is no major UK or economic data today so traders are looking ahead to UK inflation data released tomorrow, where July CPI is expected to drop -0.1% on the month but rise 0.6%, steady from the prior reading.
This week’s round of Brexit talks begin with dinner tonight. The EE already fired off a warning shot yesterday when the FT reported that the bloc is saying British banks may need to wait longer to get full access to European markets. The financial industry represents a large part of UK GDP, and the UK will be keen to avoid a delay to full market access.
EUR: CFTC shows massive euro net long postions
CFTC data has shown seven consecutive weeks of rising Euro-long positions, showing higher numbers of investors betting on a stronger euro. In the week through August 11, investors had the biggest net long position in the euro since the records started in 1999.
The CFTC data just registers positions in options and futures markets, not in the many spot and forward over-the-counter (OTC) markets where foreign exchange transactions happen. Still many view it as an important indication of investor attitudes towards currencies. The highest net position on record would suggest that at least in the short-term buyers of the euro are ‘overstretched’.
