Sterling kept within its recent trading range on Thursday but this week could prove its second best so far this month as expectations that the Conservative Party may win a majority in the Dec. 12 national election fuel investors' optimism.
Prime Minister Boris Johnson's Conservatives have a 10-point lead over the main opposition Labour Party, a poll by Savanta ComRes showed on Wednesday.
A poll by Ipsos Mori on Thursday showed that 25% of respondents expected a Conservative majority, while a third expected a hung parliament with the Conservatives the largest party.
On a campaign trip to central England, Johnson promised he would end the "unbearable" uncertainty around Brexit if he wins the election, saying that political paralysis was affecting investment decisions in the country.
Johnson's planned campaign visit to a bakery in southwest England was canceled after protesters gathered outside, the BBC reported.
Elon Musk, chief executive of U.S. electric vehicle maker Tesla TSLA.O, was quoted as saying he had decided to build a new factory in Berlin, not Britain, because Brexit posed too much of a risk.
"For quite a few people the UK has been uninvestable... because of this political risk, for the confusion more than anything else," said Luca Paolini, Pictet Asset Management's Chief Strategist.
"But if you look at the polls and everything, it seems to me that it's more likely than not that the election will result in a Conservative majority and if that's the case, I suspect that Brexit will completely come off the headlines," he said.
"There will be some sort of soft Brexit, one way or another, and investors will move on."
Brexit Party leader Nigel Farage said earlier this week he would not contest the 317 seats the Conservatives won in the 2017 election, a step that could pave the way for a majority in parliament for Johnson's Brexit deal.
On Thursday, Farage said that the odds are that there will be a small Conservative majority. Asked if he trusts Johnson, Farage responded "not really."
The pound was last marginally up at $1.2859 and slightly higher versus the euro at 85.56 pence.
On Tuesday and Wednesday this week sterling closed within a tenth of a cent of its opening price, in a marked change from its October volatility.
The currency remained unmoved by weaker-than-expected British retail sales, which rose 3.1% year-on-year in October. Economists polled by Reuters were expecting a 3.7% increase. (Reuters)