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UK GDP better than expected

Sterling traded near a 12-week high against the dollar this morning as expectations grew that Britain would vote to remain in the European Union.

A preliminary report on first-quarter economic growth releasedthis morning  also moved the pound. A poll predicted the report would show the economy grew 0.4 percent in the first quarter and 2 percent annually. It did grow 0.4 percent in the first quarter, however it grew 2.1 percent anually, higher than market expectations.

Two polls on Tuesday showed those campaigning for Brexit were ahead, but the chances Britain will stay a member remain around 70 percent.

Despite the bounce, investors are cautious about making significant bets in favour of the pound. They worry that a vote for Brexit in June would leave Britain exposed to a slide in the pound, raise the cost of financing its huge public debt and undermine a shaky economic recovery.

Brexit would also hit workers in their pockets, costing the average working Briton the equivalent of a month’s salary by 2020.

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