Sterling hovered below a two-week high against a weak dollar on Friday as investors liquidated long positions in the greenback, with the pound set to benefit from an increasingly uncertain outlook for the US economy. The dollar was down 0.5 percent against a basket of currencies as data on Friday confirmed a weakening economic trend.
"It's generally a weak dollar story today and if weak dollar dynamics carry on through this year, GBP/USD can be drawn higher despite the fact that UK fundamentals remain poor," said Jane Foley, senior currency strategist at Rabobank.
Sterling was up 0.3 percent at $1.6450, having risen to $1.6465 earlier in the session, its highest since May 11. Traders said a large dollar sell order from a hedge fund in the overnight session had helped to push the pound higher. Technical analysts highlighted next resistance at $1.6483, the 61.8 percent retracement of sterling's fall from April 28 to May 24. Beyond that, stops above $1.65 would be eyed for more gains. Sterling slipped back from a two-month high against the euro of 86.11 pence, hit on Thursday when concerns over Greece's debt crisis knocked the single currency lower. The euro recovered to trade up around 0.4 percent on the day at 86.54.
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