LONDON: Sterling rose to a five-week high against the dollar on Friday, joining a global push against the greenback and putting in doubt the running assumption that uncertainty ahead of the UK general election is a mounting risk for the pound.
Hedge funds were said to be among those buying sterling, on track for a 1.5 percent gain on the week in its best two-week run against the dollar since the immediate aftermath of Britain's last general election five years ago.
By 1521 GMT it was 0.8 per cent higher on the day at $1.5167, having reached its highest levels since March 18. It had hit a five-year low of $1.4580 last week.
"Since the start of the year strategists have been saying that every scenario from the election was bad for the pound," said Richard Benson, co-head of portfolio investments at Millennium Global, which manages currency exposure for sovereign wealth funds and other major institutions.
"We think for example a Labour government that implements looser fiscal policy may lead to the Bank of England tightening interest rates faster, which would be good for the pound. What is bad for sterling is if we don't get a government at all." Several banks have published research recently suggesting a risk premium is built into sterling because the May 7 election is almost certain to deliver a hung parliament, leading to a potentially unstable coalition government.
But outside of the fallout of the dollar's broad strength this year, there has been precious little pressure on spot rates.
