Sterling stabilises; speculators cut back on sterling longs

* Graphic: World FX rates in 2020

* Graphic: Trade-weighted sterling since Brexit vote

LONDON, March 22 (Reuters) – Currency market jitters had limited impact on the pound on Monday, which was little changed against the dollar and euro, and positioning data showed speculators reduced their sterling longs but remained bullish.

Turkey’s surprise decision to fire its central bank governor triggered a plunge in the lira, and commodity currencies including the Australian dollar weakened while the safe-haven yen rose.

But the pound was broadly steady, up 0.1% against a weaker dollar at 0835 GMT at $1.3869. Versus the euro, it was little changed at 85.83 pence per euro.

Speculators reduced their net long position on the pound versus the dollar in the week to March 16, CFTC data showed. Although the market is still overall bullish on sterling, the size of the bullish position has shrunk for the past two weeks .

The pace of the UK’s vaccine rollout, which is one of the fastest in the world, kept analysts upbeat about the prospects of Britain reopening from lockdown. The picture was less encouraging in Europe, with Germany set to extend its lockdown into its fifth month.

“It may be hard for GBP to make much headway against the USD as Europe battles with the third wave of the virus, yet EUR/GBP may continue to press support at 0.8540,” ING strategists wrote in a note to clients.

The European Union threatened last week to block exports of COVID-19 vaccines to Britain to safeguard scarce doses for its own citizens.

Britain said on Monday it would remind the EU of its commitment to allow vaccine manufacturers to fulfil orders, including the export of shots to Britain.

“The evidence of the disruptions to UK trade with the EU in January are a timely reminder that while the Brexit process is over, the economic consequences will continue to flow,” JPMorgan FX analysts wrote in a note to clients.

JP Morgan said it was moving to a short position in cable “to reflect the increased question marks against high-beta currencies following the latest surge in US yields.”

In Northern Ireland, there is deep anger among some pro-British unionists about the so-called Northern Ireland protocol, which was designed to prevent a “hard” Irish border after Brexit.

In a busy week for UK economic data, January unemployment figures are due on Tuesday, February CPI data and March PMIs are due on Wednesday, and February retail sales data is due on Friday.

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