Sterling has gained significantly this week, as investors’ concerns about political shifts outside Britain benefited the currency. It is the surprise winner during the week of Donald Trump’s electoral upset in the US, which threw markets into turmoil as traders reappraised populist movements and inflation.

Sterling was particularly strong against the euro, providing some relief for Irish exporters. Having risen above 90p to the euro in recent weeks, sterling was trading on Friday at 85.8p per euro, with worries about the euro zone economy contributing to its currency’s slide.

The pound’s recent surge marks a reversal from last month, when it was the worst performer on international currency markets,. As Britain’s currency heads for its largest weekly percentage improvement against the euro in more than seven years, investors are cooling on the shared currency before votes that may demonstrate the strength of anti-establishment movements in the region, particularly Italy’s constitutional referendum.

“It’s very much about risk elsewhere. We have the Italian referendum in early December, we have very important elections in Germany and France,” said Niels Christensen, chief currency strategist at Nordea Bank AB in Copenhagen.

Sterling climbed 1 per cent to $1.26 and was headed for its second week of gains versus the greenback. It strengthened 1.2 per cent to 85.77p per euro, set for a 3.8 per cent weekly increase against the single currency, the largest since January 2009.

Traders reduced their short bets against the pound as they waited for a British supreme court hearing, scheduled for December 5th-8th, which may potentially result in a ruling that delays Britain’s exit from the European Union. On November 4th, the pound completed its best week against the dollar since 2009, amid speculation that Brexit will be delayed or watered down after a court ruled that the British government can’t start the process of leaving the EU without a vote from politicians.

Sterling is still down about 15 per cent since the June 23rd referendum.

“There is just a bigger theme now, and we just don’t have a trigger for more pound downside here,” said Manuel Oliveri, a currency strategist at Credit Agricole SA’s corporate – and investment – banking unit in London. “Hard-Brexit fears were falling already, and you have a market that is positioned one-sided. When there’s no more impulse, these positions get taken off at some point.”