(Bloomberg) -- Investors are betting on a rebound for the pound, a sudden u-turn from just 10 days ago when the UK’s big-spending budget exacerbated weeks of selling.

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Banks from JPMorgan Private Bank to Credit Agricole SA are predicting further gains for sterling as a hawkish tone from the central bank and politics in the US and Germany turn the UK currency into an unlikely haven. The pound is on track to snap its longest losing streak against the dollar in six years and is poised to post its best week against the euro of 2024.

The currency is looking like a safe destination. Political turbulence is fueling fears of a bond splurge in Germany, while the UK’s services-focused economy could leave it less exposed if the trade tariffs that incoming US President Donald Trump has brandished actually materialize.

“Post election, post budget, the UK is benefiting from a ‘dullness dividend,’” said Sam Zief, head of global currency strategy at JPMorgan Private Bank.

The pound rebounded from its lowest level since August on Thursday, climbing almost 1%, after the BOE cut interest rates by a quarter point, but refrained from signaling further easing. The currency had been under pressure since September, following Governor Andrew Bailey’s hint at more aggressive reductions.

Traders pared bets on rate cuts following the meeting, pricing a 16% chance of another quarter-point cut in December, compared with a chance of about 25% on Wednesday.

“The political risk premium in GBP has faded again, especially with the BoE calming markets with its gradual approach to rate cuts,” said Kirstine Kundby-Nielsen, currency strategist at Danske Bank A/S.

Budget Slip

Though the move was short-lived, the pound extended its recent slide after the UK budget last week, as concern over the country’s fiscal sustainability overshadowed expectations for higher inflation.

Kundby-Nielsen forecasts the pound will rise to $1.31 and 81 pence per euro in the next six months, while Credit Agricole and Jefferies see a slower pace of rate cuts helping sterling to outperform against the yen and other non-dollar currency crosses.

Signals in the options market also point to more gains in the pound. Risk reversals suggest that market sentiment for the currency is recovering after falling to its most bearish since March 2023 just a week ago.