London, April 23 (Bloomberg) -- The British pound, which has risen 1.4 percent against thedollar this month, was little changed amid speculation higher U.K. borrowing costs andgrowth rates will soon bolster the currency against the dollar. One pound bought $1.4411, compared with $1.4432 late Friday. Against the euro it was at62.48 pence, compared with 62.64. This year, the pound has fallen 3.5 percent against thedollar and risen 1 percent against the euro. Faster economic expansion in the U.K. this year relative to the U.S. is likely to attractinvestors to British assets and the pounds needed to buy them. A widening interest-rategap between the U.K. and U.S. may also buoy sterling because of the superior returnsavailable on short-term U.K. deposits. ``The U.K. economy is pretty strong,'' said John Calverley, chief economist at AmericanExpress Bank Ltd. ``Interest rates are going more in favor of sterling.'' He sees the U.K.'skey rate being cut 25 basis points to 5.25 percent this year, while the U.S. benchmark willdrop half a point to 4 percent. He sees the pound reaching as high as $1.46. Sterling may also benefit from the perception that the Bank of England will lower borrowingcosts if necessary to bolster growth, some analysts said. Traders are waiting for reports on the U.K. and U.S. first- quarter gross domestic productdue Friday for further evidence of the difference in growth between the two countries. On an annualized basis, the U.S. is expected to have expanded by 1 percent. The probableU.K. growth figure is 0.4 percent, which, if annualized, would be about 1.6 percent.
U.S. Contraction
Deutsche Bank and HSBC are both predicting two successive quarters of economiccontraction or, technically, a recession in the U.S. this year. Still, the pound's performance will be affected by that of the euro against the dollar,analysts said. Earlier, sterling dropped as low as $1.4382, tracking euro declines. ``The euro and sterling will move very much together,'' in coming months, said MatthewClements, an economist at Prebon Yamane. ``It's difficult to see an upside for'' the poundagainst the dollar, he said. He sees it trading between $1.40 and $1.44. Traders often buy and sell the two currencies together. The U.K. sells almost 60 percent ofits exports to euro-zone countries, compared to about 15 percent to the U.S. The euro fellas low as 89.91 U.S. cents from 90.42 late Friday as a report showed German businessconfidence fell in March. ``As long as there is the possibility that the pound may go into the euro zone nobody willbuy sterling against the euro,'' said Jane Foley, a currency strategist at Barclays Capital.She sees the pound trading between $1.41 and $1.4450 in coming weeks. A report today showed the U.K.'s broad measure of money supply, M4, rose 0.7 percentlast month after increasing 0.3 percent in February, the Bank of England said. Economistshad expected M4 would rise 0.5 percent in the month.