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Sterling Consolidates above 1.38

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LONDON, Feb 11Reuters Sterling traded in recent ranges on Thursday, above the 1.38 mark hit earlier this week in relatively quiet currency markets owing to a Chinese holiday and a sparse data calendar.

Optimism over the speed of Britains COVID19 vaccination programme compared to other countries in Europe and expectations of a weaker dollar this year have boosted the pound to nearly 3year highs against the dollar and its highest since May 2020 against the euro.

A rally above 1.38 this week has made sterling the bestperforming G10 currency of 2021, up 1.1 against the dollar and nearly 2 against the euro.

A postBrexit trade deal with the European Union, and Bank of England comments that British banks would need at least six months to prepare for interest rates going below zero, have also boosted sterling.

Since the bank met last week, markets have pushed their expectation of negative rates out to February 2022.

Speculators meanwhile increased their long positions on the pound in the week to last Tuesday, CFTC data shows.

On Thursday, sterling traded 0.14 lower to the dollar at 1.3815, having hit a high of 1.3865 the previous day.

Against the euro, it was 0.14 lower at 87.73 pence, off a May 2020 high of 87.38 hit at the end of last week.

GBP outlook for coming weeks is constructive and EURGBP is set to retest the 87.50 pence level today, said Petr Krpata, INGs chief EMEA currency and interest rates strategist.

Investors had their eye on economic data in Britain….

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