On Friday, sterling continued to climb higher and is on track to report gains for a third consecutive week as markets continue to take into consideration the comments from top EU policymakers as somewhat positive for Brexit negotiations.
In the week shortened by holidays in the United States and Japan, the dollar weakness was across the board, while the British pound increased 0.2 percent to $1.3327 bringing it to close to key technical levels. Sterling posted healthy gains compared to the Japanese yen and the Swiss franc with an increase of 0.4 percent.
On Friday, the president of the European Commission Jean-Claude Juncker stated that a meeting with British Prime Minister Theresa May scheduled for December 4 shall permit the EU to decide whether sufficient progress has been reached on Brexit talks.
“EU Juncker’s comments today was taken as a sign that negotiations with the EU were progressing to the next stage but markets are not ready to take big bets yet as the asymmetric bets are large,” said Thu Lan Nguyen, an analyst.
Sterling is closing in on key levels on the charts as well against the dollar. If sterling can surpass the $1.3330 line, which it has been unsuccessful numerous times over the past week, it could rally to the September highs of $1.3347 or greater.
The current increase in sterling hasn’t been came with a prompt increase in positions, which can indicate that investors may still be underweight on the British currency.
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“We are near some very important technical levels on sterling here,” said John Marley of a currency risk management firm.
The greenback reached a five-week low compared to the basket of currencies, with trade slowed down this week due to the North American Thanksgiving holiday on Thursday, which was also a national holiday in Japan.