Anna 
The pound is gaining ground against the dollar as investors bolster their bullish positions, and the currency may receive additional support from upcoming data showing that British business activity is among the strongest in the developed world.
Monthly business activity surveys expected this week are anticipated to reveal that the UK outperformed other major economies in February, surpassing the eurozone and even outpacing the United States, which has maintained relative economic strength.
Despite facing challenges, including two consecutive quarters of negative growth last year, the UK has demonstrated resilience. Economic data suggests a rebound, with service-sector activity surging to its fastest pace since May 2023, contributing to a positive outlook for British business activity.
Sterling has recovered from a year-to-date loss and is down just 0.9% against the dollar in 2024. The pound’s higher yield, driven by expectations of persistent inflation leading to a more prolonged period of higher interest rates by the Bank of England, has attracted investors.
Data from the Commodity Futures Trading Commission (CFTC) reveals an increase in speculators’ bullish positions on sterling. Leveraged funds, including hedge funds and money managers, have aggressively added to their long positions, holding their largest bet on a pound rally since October.
JPMorgan and Deutsche Bank have adjusted their growth forecasts for the UK, and Bank of America has turned bullish on sterling, raising its year-end target for the pound.
While caution is advised against getting carried away by signs of economic recovery, there is acknowledgment that the outlook for Britain’s economy is starting to brighten. The Bank of England is currently focused on services and wage inflation as key indicators for future policy decisions.
