Sterling should get a boost if upcoming trade negotiations between the European Union and the UK lead to a deal in October.
Diplomatic sources told Reuters that the EU is willing to compromise in Brexit talks by softening its demand that Britain heeds EU rules on state aid in the future . Britain and the EU have planned more trade negotiations all the way until Oct. 2 .
The pound last month racked up its biggest monthly rise against the U.S. dollar since May 2009, 5.5%, but remains 13% below its Brexit referendum day high (1.5022). IMM speculators upped their net EUR long position to a record high in the week to July 28, but they also raised their net GBP short position to an eight-week high -- with the bearish shift in GBP positioning partly reflecting fears that the EU and UK might fail to agree a trade deal.
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(Robert Howard is a Reuters market analyst. The views expressed are his own)
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