Sterling snapped a four-day losing streak against the US dollar this morning, gaining 0.04% to $1.5585, as better-than-expected second-quarter growth in the eurozone (predominantly helped by stellar GDP figures in Germany) and merger & acquisition talk in the domestic equity market revived risk appetite.

However, sterling’s advance against the dollar is likely to be short lived in my opinion. Demand from emerging markets is beginning to slow, while British and European economies are yet to feel the impact of fiscal austerity. The feeling at this juncture is that growth in the UK and Europe has now peaked, which if true is likely to encourage investors to start positioning their portfolios in a more defensive manner. This means that we could see an influx into safe-haven assets, which is likely to favour the US dollar and the yen. Meanwhile, Standard Bank has advised clients to sell sterling against the dollar, predicting that the UK currency will decline to $1.5140. Investors are advised to end the trade should sterling strengthen to $1.5870, according to Steve Barrow of Standard Chartered. Barrow also advised investors to buy the Norwegian krone against the Swedish krona.