While investors should be cautious about any trading recommendations, a sharp fall in sterling earlier in the year was almost a dead certainty if several currency experts were to be believed. But with the pound trading near nine-month highs against a basket of other currencies, some strategists have been left with egg on their faces.
"I have to put my hand up," David Bloom, global head of foreign exchange strategy at HSBC told CNBC Monday. "I was one of them."
The two-week U.S. government shutdown is the reason behind sterling's strength, Bloom said. The current deadlock in Washington, together with fears that an agreement on raising the debt ceiling might not be reached before the October 17 deadline, has meant many analysts now see the U.S. Federal Reserve delaying the "tapering" of its asset-purchase program.
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This prediction that the extra liquidity will continue has meant the U.S. dollar has slipped after a rally in the middle of 2013, and investors have opted for sterling and the euro instead. The pound was trading at $1.597 on Monday morning after starting the year at $1.624 and collapsing to a low of $1.486 in July.