Pound Advances against the Dollar as Market Awaits UK GDP Figures

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Pound Advances against the Dollar as Market Awaits UK GDP FiguresThe sterling rose to its highest level in four years against the greenback as a boom in mergers and acquisitions fuelled demand for the currency, while the improving economic outlook fed investor optimism.

The pound was 0.1 percent higher at $1.6815 as of 4:40 p.m. in London trading after earlier rising to $1.6858, the strongest peak since November 2009. However, it remained slightly unchanged against the euro at 82.34 pence per euro.

The sterling was buoyed by the data that will be released tomorrow that indicated GDP in the first quarter surged the most since 2010. It was also boosted by news of the proposed merger between Pfizer and AstraZeneca.

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“GDP figures are out tomorrow and with good news people have decided to test recent highs” for the pound, Stuart Bennett, the London-based head of Group-of-10 foreign-exchange strategy at Banco Santander SA told Bloomberg. “The market is still quite long sterling, it’s a crowded trade at the moment and it’s going to take a lot to jump higher.” A long position is a bet that an asset price will rise.

A Bloomberg poll indicates that economists forecast the UK economy to have expanded at the rate of 0.9 percent in the quarter ending March, the most since 2010. The GDP grew at 0.7 percent in the fourth quarter of 2013.

The pound has advanced 5.5 percent in the last six months, making it the best performing of the 10 developed-economy currencies that are monitored by the Bloomberg Correlation-Weighted Indexes. The dollar has advanced 0.8 percent while the euro rose 1.3 percent. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com