After a rollercoaster week in which the pound hit a six-and-a-half-month low against the euro and multi-month troughs against several other currencies, sterling was set to end higher against its major rivals.

The pound rose to to $1.6360 from $1.6268, a day after the market took talk of UK-related M&A activity and comments from a Bank of England policymaker Paul Fisher that quantitative easing was working as an opportunity to cover short positions. Traders continued to pick up the pound after it posted its biggest one-day gain against a basket of currencies in nearly a year on Thursday.

Short covering has breathed some life into the pound, which has come under heavy pressure in recent weeks, battered across the board on the view that UK interest rates will stay low and public finances will deteriorate further. The pound gained against the euro, which fell to 91.45p.

The dollar was stronger against the euro and the Japanese yen even though billionaire investor and philanthropist George Soros said the US economy is going to act as a drag on world growth.

Soros, who runs Soros Fund Management, said: “The world economy is going to have some growth, but we are bound to be flat.”

Investors around the world listen closely to Soros’ comments as his hedge fund makes big bets on currencies, interest rates and stocks. Soros is credited with forcing the pound out of the European exchange rate mechanism in the early 1990s.

Looking to China, Soros said he believes an asset bubble was emerging. China’s currency is tied to the dollar and Soros said that relationship will ensure that the renminbi is undervalued.

“And that will be unsustainable,” he said.

Meanwhile, the US Government said yesterday that foreigners continued to buy long-term American financial assets in August, although China, the world’s largest holder of US Treasury

bonds, cut its holdings of government debt. On the petroleum markets, crude oil retreated from a year-high above $78 after stock markets retreated on disappointing earnings news from Bank of America and General Electric.

US crude oil futures fell 42 cents to $77.16 a barrel, off a session high of $78.17, the highest since October last year.

Brent crude shed 62 cents to $75.61.