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Sterling steadies above 1.40 as stronger dollar weighs

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LONDON, May 13 Reuters Sterling steadied above 1.40 against the dollar on Thursday after losing its perch near 1.41 the previous day when stronger than expected U.S. inflation data pushed the dollar higher.

UK GDP figures, which came in above expectations, had helped the pound stay strong on Wednesday, but it lost ground after the U.S. data showed that consumer prices had increased in April by the most in nearly 12 years, news which pushed the dollar higher as investors turned more cautious.

By 0814 GMT, the pound was flat against the dollar at 1.4053 and 0.1 lower to the euro at 85.99 pence.

Still, analysts remain upbeat about Britains prospects for an economic rebound. Prime Minister Boris Johnson on Monday set out further lockdown easing measures, helping sterling enjoy its best day since January.

The better than expected March UK GDP yesterday underscored the bright outlook for the pound and the expected solid UK data this quarter should further support the currency, said INGs strategists in a note to clients.

We expect eurosterling to retest the 85 pence level in the coming weeks. After the latest dip in sterling speculative positioning, sterling longs should start increasing yet again.

CFTC positioning data showed that speculators reduced their net long position on the pound in the week to May 4 .

By the end of Wednesday, sterling was the second best performing G10 currency after the Canadian dollar up 3.2 against the U.S. dollar yeartodate. Bets that…

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