Sterling Edges up but Political Risks Limit Gains

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LONDON, April 29 Reuters The pound edged up slightly against the euro on Thursday but was broadly flat against the dollar, having been temporarily boosted overnight after the Feds dovish outlook prompted a weaker dollar.

Sterling hit a nineday high of 1.3979 in Asian trading after the U.S. Federal Reserve said it was too early to consider rolling back its emergency support pushing the dollar to nineweek lows.

But the pound soon lost these gains during the European session.

At 1439 GMT, it was at 1.3956, up 0.1 on the day and up just 0.5 on the week so far. Versus the euro, it was up 0.2 at 86.77 pence per euro, stuck in the narrow range it has traded in for most of April.

Investors are watching political developments in Britain, as Prime Minister Boris Johnson is under pressure from a series of accusations about how he responded to the COVID19 pandemic and who paid for the refurbishment of his flat, as well as an inquiry into leaks of private information from his office.

Although also benefiting from the softer USD environment and GBPUSD is very close to the 1.4000 level, political woes are limiting the GBP upside, ING strategist Petr Krpata wrote in a note to clients, citing the Electoral Commissions investigation.

Coupled with the upcoming Scottish elections, all this points to limited nearterm upside to GBP, he added.

Britain holds regional and local elections on May 6, including a vote in Scotland expected to produce a proindependence majority there….

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