Positive sentiment surrounding the British economy has spurred a winning streak for the pound, but some analysts are not convinced its strength is here to stay.
The U.K. economy grew 0.8 percent in the first quarter of 2014 on the previous quarter, below expectations of a 0.9 percent rise, but up from 0.7 percent growth in the fourth quarter of 2013. The sterling was little changed against the U.S. dollar following the data release, and closed Tuesday in U.K. trading at around $1.6825.
“The sterling has strengthened by more than 10 percent since last July as the pace of growth in the U.K. has fueled speculation that the U.K. Monetary Policy Committee (MPC) will raise interest rates more quickly than the U.S. Fed (Federal Reserve). But we think sterling will struggle to maintain its current level,” said Capital Economics’ economist Jack Allen.