Sterling rose to a seven-week high against a broadly weaker dollar on Friday after data showed tepid US growth while talks in Washington on a deal to raise the debt ceiling before an August 2 deadline remained deadlocked. The pound's gains versus the dollar mirrored those by the euro, which recovered from earlier falls after Moody's threatened to cut Spain's credit rating and the country's prime minister called early elections.
Sterling reversed falls earlier in the day, rising 0.6 percent against the dollar to $1.6471, just below the June 7 high of $1.6474, with some traders also citing talk of month-end dollar selling. Concerns about debt crises on both sides of the Atlantic continued to draw investors away from riskier assets, however, pushing sterling to a record low versus the safe-haven Swiss franc of around 1.2902 francs.
Figures earlier showed the US economy stumbled in the first half of 2011 and came dangerously close to contracting in the January-March period, raising the risk of a recession if the debt stand-off does not end quickly. With four days remaining until the United States hits its debt limit, President Barack Obama on Friday urged divided Republicans and Democrats to reach an agreement. The euro dipped 0.1 percent to 87.41 pence, staying below its 100-day moving average around 88.18 pence.
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