"And while that is clearly challenging the market’s expectations of a more benign monetary policy outlook, it also represents a generally more comforting message compared to the stagflationary scenario that markets seemed to deem inevitable not long ago" - Credit Suisse.

The Pound to Euro exchange rate has risen to become one of the best performing Sterling pairs of the week and is tipped by strategists at Credit Suisse for an eventual recovery near to 1.15, though they also suggest buying in on dips, indicating that it could be at risk of weakness beforehand.

Sterling was one of the better performing major currencies for the week on Friday thanks to a chart-topping rebound in the UK editions of the S&P Global PMI surveys as well as a hawkish and no-nonsense stance on the outlook for Bank Rate from Catherine Mann at the Bank of England (BoE).

"Ultimately, the key message that keeps emerging louder and clearer from economic data releases is that broad economic activity is holding up better than most in markets anticipated at the beginning of the year," says Alvise Marino, a director of macro strategy at Credit Suisse.

"And while that is clearly challenging the market’s expectations of a more benign monetary policy outlook, it also represents a generally more comforting message compared to the stagflationary scenario that markets seemed to deem inevitable not long ago," Marino writes in Wednesday market commentary.

Above: Pound to Euro exchange rate shown at hourly intervals with selected moving averages. Click image for closer inspection. To optimise the timing of international payments you could consider setting a free FX rate alert here.

When it comes to the outlook for economies and interest rates Marino and colleagues cited on Wednesday a difference of opinion between the statistics released by private sector and official bodies, and the financial markets, for the indecision evidenced by recent price action in many exchange rates.

This includes the Pound to Euro exchange rate, which has been tipped as a buy in the event of any dips toward the 1.1235 area, with a price target of 1.1495.

"The past week has seen further extension of the themes that have dominated FX price action since early February. At the forefront remains the hawkish repricing of monetary policy expectations, mostly in the form of still higher terminal rates. Economic data remain the key catalysts," Marino says.

With the S&P Global PMI surveys aside, a Confederation of British Industry (CBI) survey suggested on Thursday that realised retail sales rose notably in February to more-than make up for the decline recorded in January, though industrial sector orders were weak; suggesting softness at home and abroad.

Above: Pound to Euro rate shown at daily intervals with selected moving averages. Click image for closer inspection.

These data points are the latest in a string suggesting the economy has not weakened to the same extent as had been envisaged by many forecasters in the final months of last year, while recent declines in wholesale energy prices are indicative of a modestly improved outlook for the months ahead.

Others have included an official record of stronger retail sales for the month of January, private sector reports of resilient house prices for recent months and official data revealing both fresh increases in prices paid within supply chains as well as accelerated momentum in permanent pay settlements for workers.

"Against this backdrop there is potentially a risk of interest rates having to be raised further than was thought likely just a few short weeks ago, and this is something that pricing in interest rate derivative markets has come to reflect in the latter weeks of February.

"We have an inflation remit, and we will achieve it one way or another. Failing to do enough now risks the worst of both worlds – the higher inflation and lower activity of the ‘purple’ regime – as monetary policy will have to stay tighter for longer to ensure that inflation returns sustainably back to the 2% target," the BoE's Catherine Mann warned on Thursday when addressing a Resolution Foundation event in Sheffield.