Sterling Slips; Speculators Bearish Bets Increase

Sterling slipped in early London trading on Monday as Brexit talks resumed in Brussels, while bearish bets on the pound increased for the second week running.

European shares hovered near ninemonth highs as strongerthanexpected Chinese factory output, combined with hopes for a COVID19 vaccine, increased investors risk appetite.

After initially opening higher, the pound fell as investors focused on Brexit negotiations, which have failed to make progress on two key issues competition rules and fishing.

Britain left the EU in January and both sides are trying to reach a deal that would govern nearly 1 trillion dollars in annual trade before the statusquo transition period ends on Dec. 31.

Some analysts said the recent departure of Dominic Cummings, Prime Minister Boris Johnsons top advisor and Brexit campaigner, was a positive development, which could lead to Britain being more willing to compromise.

ING strategists, in a note to clients, said that while prospects for a deal looked slightly brighter, the core issues remained largely unresolved and time to reach an agreement was running out.

While we see officials suggesting more than one week may still be needed, the technical time for ratification in the EU and UK is dangerously shrinking, they added. In light of this, we could see both parts rushing into a deal already this week.

At 0914 GMT sterling was flat against the dollar at 1.3198, having risen to as much as 1.3242 in early London trading.

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