On Friday, Sterling was on course for its strongest week since December as it rose close to a one-month high versus the dollar ahead of a Bank of England meeting next week.
This rebound in the pound is attributed to the reopening of the British economy and a drop in the number of COVID-19 cases.
The pound has experienced around 3% rise in less than a fortnight to close near $1.40.
Broad dollar weakness, which was exacerbated by a dovish Federal Reserve meeting this week, has also helped sterling.
The pound was marginally higher on Friday by 0745 GMT at $1.3965, slightly below the one-month high of $1.3982 reached on Thursday.
Against the dollar this week, the pound has gained 1.6% – making it one of the top performing major currencies.
The currency was however a little weaker against the euro, at 85.18 pence, although it remains close to its strongest level versus the single currency since early April.
On Thursday when the Bank of England meets, it is expected to keep its foot firmly pressed on the stimulus pedal. But there is growing discussion about the need to begin tapering its bond-buying programme as the economy recovers. Two BoE policymakers have expressed such a view recently.
“Markets appear to be rebuilding some GBP long positions ahead of next week’s Bank of England meeting, with sentiment on the currency that has recently been buoyed by a contraction in COVID-19 cases in the UK despite most restrictions having now been lifted,” ING analysts said in a research note.
Source: Reuters
