UK trade figures out Thursday are set to be the key release for sterling this week as traders seek clues on whether the currency’s bullish run has more legs.

Sterling had a stellar March, becoming the best-performing major currency. It followed that with a series of cyclical highs this month.

It rose to a 14-month peak on Tuesday on a trade-weighted basis after an 18-month high against the euro on Monday.

Although less eye-catching, sterling’s performance against a resurgent dollar last week was also significant as it failed to break below the upward trend line at $1.5770 – a technical signal suggesting further rises.

The pound’s strength has been underpinned by upbeat reports on UK manufacturing and services– and Thursday’s trade data are unlikely to rock that boat.

HSBC is forecasting more good news with a narrowing of Britain’s total trading deficit to £1.3bn for February.

Morgan Stanley says the pound is also benefiting from haven flows from the Middle East, while positioning data show bearish bets have fallen for a third successive week.

A rise from its 55-day moving average of $1.5820 towards $1.62 over the next month is in prospect.

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