LONDON: Sterling traded within half a cent of one-month highs against the dollar on Monday, boosted by a generally brighter mood on stock markets which sent a number of currencies seen as riskier higher against the dollar.
The pound rose above $1.44 for the first time since the middle of February in U.S. trading on Friday, as action from the European Central Bank to get inflation moving, and higher oil prices gave investors some optimism about the global outlook.
That has turned attention for a moment away from the uncertainty over Britain's upcoming referendum on leaving the European Union, widely seen as behind the biggest rise in bets against sterling in almost 3 years.
Analysts said sterling would still struggle in relative terms into the vote on June 23, particularly if labour data on Wednesday adds to signs that uncertainty over the referendum is worsening a slowdown in UK growth.
"Expectations for dovishness from the Bank of England could see the pound underperform other risk correlated currencies, especially if the jobs data isn't strong," Citi strategist Josh O' Byrne said.
The pound was less than 0.1 percent lower on the day at $1.4380 while gaining 0.1 percent to 77.37 pence per euro.
Tim McCusker, who advises hundreds of U.S. institutional investors as chief investment officer of consultancy NEPC, said he was advising clients to hedge their exposure to the pound, still down almost 9 percent since early December.
"I don't think enough U.S. investors are hedged (on sterling)," he said. "They have felt the pain of that move (down), although a lot of the equity moves of the last few weeks have helped.
"I worry that the (example) of the Scottish referendum is creating a false sense of complacency. If the polls keep adjusting then that may create more urgency."
While polls on the last month of the run-in to Scotland's vote on whether to stay in the United Kingdom 18 months ago showed the leave campaign on the verge of victory, in the end they came up well short.
Polls for the EU referendum are far tighter than the Scottish ones were this far out, but bookmakers odds only assign a roughly 30 percent chance of an "Out" vote.
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