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Sterling Rises Against Dollar at Start of Data-Heavy Week

LONDON, April 19 (Reuters) - The pound rose to hit a two-week high against the dollar on Monday at the start of a data-heavy week that is expected to provide more evidence that Britain’s economy is rebounding from its deepest recession in 300 years.

The pound had a strong first quarter, supported by dwindling expectations of negative interest rates and by a fast roll-out of vaccinations against COVID-19 across Britain.

As England re-opened shops, hairdressers, gyms and pub gardens in April, analysts expect a faster economic recovery in the United Kingdom than in the European Union, which is facing a third wave of infections.

Traders will be watching PMI surveys for the UK, together with data on the labour market, inflation and retail sales this week.

Both ING and UniCredit analysts told clients there was scope for sterling to strengthen to $1.40 this week.

“GBP continues to find support on dips and it seems like investors are happy enough staying positioned for the 2Q UK re-opening story,” said Chris Turner, Global Head of Markets at ING.

“Today we have already seen some encouraging April Rightmove house price data,” he said.

Advertised prices for homes in Britain hit a record high after finance minister Rishi Sunak stoked the market again by extending a tax cut for home-buyers last month, property website Rightmove said on Monday.

Speculators’ net long position on the pound versus the dollar rebounded in the week to April 13 after slipping to its lowest since February in the previous week, futures data from CFTC showed.

Versus a weakening dollar, the pound rose 0.4% to $1.3900 at 0958 GMT, its highest level since April 6. It was 0.1% lower versus the euro at 86.61 pence, after it hit its highest of 86.30 pence since April 8.

“Current domestic COVID data is encouraging and a further easing of lockdowns will all point in the direction of the UK economy early out of the block on economic recovery expectations,” said Neil Jones, Head of FX Sales at Mizuho Bank.

Reporting by Joice Alves Editing by Raissa Kasolowsky and Andrew Heavens

Source: Reuters

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