LONDON: Sterling was set to rack up its best week since early March on Friday, helped by a handful of polls that have showed solid support for Britain to remain in the EU in June's referendum as US President Barack Obama also weighed into the debate.
A poor batch of UK retail sales numbers had put some pressure on the pound on Thursday, pointing again to a weakening of economic activity as firms and consumers brace for the June 23 referendum on Britain's European Union membership.
But this week's polls have given a solid lead to the "In" campaign, soothing nerves among investors who worry sterling could sink by as much as a fifth in value against the dollar if Britain votes to leave the 28-nation bloc.
A rise in oil prices, with which sterling is closely correlated, also played into the mix, pushing the pound up 0.2 percent to $1.4340. Against the euro it gained 0.3 percent to 78.58 pence.
"Politics has been an element for sterling for a while but the risk environment has also been a big factor," said Citi strategist Josh O'Byrne. "It has really moved around with the shifts in stocks and commodities over the past day."
In trade-weighted terms, the pound is 1.3 percent higher on the week. That would be its best week since the start of March and second best this year.
O'Byrne also pointed to shifts in UK money markets, which have largely retreated from pricing in the chance of more cuts in UK interest rates over the next year.
While both the retail and employment numbers this week looked shaky, inflation rose, offering some hope to the Bank of England that a pickup is finally under way as global oil prices steady.
Sterling's roughly 10 percent fall since November may also be a factor in that, putting pressure on companies dependent on the cost of imported goods to raise prices.
On a visit to London, Obama made an impassioned appeal on Friday for Britain to remain in the European Union, saying membership had magnified Britain's place in the world and made the bloc stronger and more outward-looking.
That adds to a long list of global figures who have spoken out in favour of Britain staying in the EU, underlying the scale of nerves around the vote. Some major banks say a vote to leave would knock a fifth of the value off sterling and would also weaken the euro.
Analysts from French bank Societe Generale on Friday recommended hedging against a Brexit through options profiting from a weaker euro against the dollar.
"Brexit would not only hurt the UK but also its European partners, and the shock would likely pressure EUR/USD towards the bottom of its range and a 1.05 low," they said.
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