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FX round-up: Traders rush to cover some shorts on Sterling 'just in case'

By Alexander Bueso

Date: Thursday 22 Aug 2019

FX round-up: Traders rush to cover some shorts on Sterling 'just in case'

(Sharecast News) - Traders were forced to cover some of their short positions against the pound after the French President appeared to leave the door open to a possible solution of the Irish Backstop question, which might suffice to avoid a disorderly withdrawal of the UK from the European Union.
Following meetings with Prime Minister Boris Johnson, France's Emmanuel Macron backed a month of negotiations to try and find a solution.

He did emphasise that a radical change to the withdrawal bill already on the table was not possible.

"I want to be very clear. In the coming month, we will not find a new withdrawal agreement that is far from the fundamentals," he said.

But coming on the back of similar-sounding remarks overnight from the German Chancellor, Angela Merkel, that sufficed to send some traders who had been short scurrying.

As of 1947 BST, cable was 1.1% higher to 1.22605 and against the euro, Sterling was adding 1.06% to 1.1058.

Further afield, it was a generally risk-off session, with the US dollar trading on the back foot after two top US central bank officials poured cold water on expectations for further policy easing for the moment.

The heads of the Kansas City and Philadelphia Fed banks, Esther George and Patrick Harker (the latter of which did not wield a vote on the Federal Open Market Committee) made their remarks ahead of a key speech by Fed chairman Jerome Powell scheduled for the next day, with financial markets having already priced-in at least three more 25 basis point interest rate cuts by April 2020.

The US dollar meanwhile tradind down by 0.21% to 106.403 Japanese yen while the euro was edging up by 0.01% against the buck to 1.10856.

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