Pound pushes higher on sales data, Irish minister's Brexit tone
* Strong January retail sales support sterling
* But Brexit uncertainty leads to third week of losses
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv
(Adds details on latest move higher, Ireland FM comments)
By Saikat Chatterjee
LONDON, Feb 15 (Reuters) - The pound rallied in late
European trade on Friday, helped by reports of some hedge fund
buying, a conciliatory tone on Brexit from the Irish foreign
minister and strong British retail sales published earlier in
The move up to the day's high against both dollar and euro,
came in the face of Thursday's Brexit vote defeat in parliament
for Prime Minister Theresa May.
Sterling jumped half a percent to as high as $1.2860
versus the dollar, while against a broadly weaker euro
the pound added 0.7 percent to reach 87.62 pence.
Analysts said that while sterling's earlier strength owed
itself to the decent January retail sales numbers, the later
move upwards may be because of thin liquidity in late Friday
trading and some hedge fund purchases of the pound.
The Irish foreign minister also told Reuters that despite
May's latest parliamentary loss, European Union states still
stand willing to offer a package to help her get a Brexit
withdrawal deal over the line.
On a weekly basis, the British currency remains set for its
third consecutive drop.
With less than six weeks before the March 29 exit date, May
has stepped up efforts to convince the European Union to grant
"The constant Brexit can-kicking has also increased the
risks of a disorderly exit," strategists at BNP Paribas said in
a daily note.
May has promised that if parliament has not approved a deal
by Feb. 26, she will make a statement updating lawmakers on her
progress on that day and lawmakers will have an opportunity on
Feb. 27 to debate and vote on the way forward.
For a factbox on what happens next, see
Sterling 's large Friday gains against the single currency
came as the euro fell across the board after a European Central
Bank board member said policymakers were discussing whether to
issue new multi-year cheap loans to banks.
RATE HIKE BETS FALL
Dwindling expectations that the Bank of England will raise
interest rates this year have weighed on the pound in recent
days. Swap markets indicate a 28 percent probability rates will
rise, compared with 30 percent earlier this week.
Derivatives markets painted a slightly more cautious picture
for the pound, with one-month implied volatility
picking up from December lows and rising to 9 vol on Friday.
Risk reversals, a market gauge of the ratio of puts to calls
on a currency, indicate investors are leaning towards buying
options to protect themselves against further downside in the
(Reporting by Saikat Chatterjee
Additional reporting by Tommy Wilkes
Editing by Larry King and Andrew Heavens)
First Published: 2019-02-15 17:25:33
Updated 2019-02-15 18:56:10
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