Sterling recovers; long positions shrink to nine-week low

* Graphic: World FX rates in 2020

* Graphic: Trade-weighted sterling since Brexit vote

LONDON, April 12 (Reuters) - The pound rose on Monday, recovering partly after a weekly loss, while CFTC data showed that speculators’ net long positions fell to a nine-week low as market participants split over the outlook for the UK economy.

The UK’s vaccine rollout - one of the fastest in the world - helped the pound have its best quarter since 2015 in the first three months of 2021.

That trend reversed last week, with sterling suffering a net 2.1% weekly loss against the euro - a move which market participants said was amplified by a squeeze of euro-pound short positions.

Speculators’ net long position on the pound versus the dollar shrank in the week to April 6, weekly futures data from CFTC showed. The market has been net bullish on the pound since early December 2020, but the latest data put levels of bullishness at its lowest since February.

At 0726 GMT, the pound was at 86.595 pence per euro, up 0.3% on the day but still weaker than when it hit a one-year high of 84.720 this time last week.

Against the dollar, the pound was up around 0.2% at $1.37315 .

Strategists at JP Morgan, who hold a short position in the pound versus the dollar, wrote in a note to clients that “winning the vaccine race” could never have provided more than a short-term boost for the pound.

“With vaccinations now fading as a driver of GBP, investor attention should turn to the sustainability of economic growth following the boom that will inevitably accompany the economic re-opening,” the note said.

“And on this front we remain skeptical about whether the UK is capable of sustaining any real degree of outperformance,” JP Morgan added, citing a “structural drag” from Brexit as well as the possibility of renewed calls for a second referendum on Scottish independence creating political uncertainty.

But ING strategists said that they expect sterling to recover “fairly soon”, with euro-sterling returning to the 0.85 level, due to the UK government’s plans to offer all adults a first dose of the vaccine by the end of July.

England’s shops, hairdressers, gyms and pub gardens re-opened on Monday in what Prime Minister Boris Johnson said was a “major step” towards freedom from the restrictions of the COVID-19 pandemic. (Reporting by Elizabeth Howcroft, editing by Larry King)