London - The pound traded close to the highest level in almost a month after inflation broke through the Bank of England’s target and as investors pared dollar positions amid skepticism about US President Donald Trump’s ability to push through pro-growth policies.
Sterling briefly broke above $1.25 before retreating as the breach triggered so-called stop trades and some banks offered the currency below that level, according to a trader in Europe who spoke in condition of anonymity as the person is not authorized to speak publicly.
It rallied almost 1% on Tuesday as data showed annual inflation in the UK accelerated to 2.3% in February, exceeding the BoE’s 2% goal for the first time since 2013.
The pound traded 0.1% lower at $1.2470 as of 11:40. It rose as much as 0.2% earlier to $1.2507, the strongest level since February 24. The British currency has appreciated 0.7% against the dollar in March.
JPMorgan is looking to exit its “tactical dollar longs” in the next week or two and “rotate away from outright dollar risk by blending our short pound-dollar with a long euro-pound through options” as near-term catalysts for further strength in the US currency are fading, strategists including Paul Meggyesi wrote in a note to clients.
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