Few signs of electoral angst as sterling hits 5-week high

(Updates prices, adds more comment)

By Jamie McGeever and Patrick Graham

LONDON, April 24 (Reuters) - Sterling rose to a five-week high against the dollar on Friday, joining a global push against the greenback and putting in doubt the running assumption that uncertainty ahead of the UK general election is a mounting risk for the pound.

Hedge funds were said to be among those buying sterling, on track for a 1.5 percent gain on the week in its best two-week run against the dollar since the immediate aftermath of Britain's last general election five years ago.

By 1521 GMT it was 0.8 percent higher on the day at $1.5167, having reached its highest levels since March 18. It had hit a five-year low of $1.4580 last week.

"Since the start of the year strategists have been saying that every scenario from the election was bad for the pound," said Richard Benson, co-head of portfolio investments at Millennium Global, which manages currency exposure for sovereign wealth funds and other major institutions.

"We think for example a Labour government that implements looser fiscal policy may lead to the Bank of England tightening interest rates faster, which would be good for the pound. What is bad for sterling is if we don't get a government at all."

Several banks have published research recently suggesting a risk premium is built into sterling because the May 7 election is almost certain to deliver a hung parliament, leading to a potentially unstable coalition government.

But outside of the fallout of the dollar's broad strength this year, there has been precious little pressure on spot rates.

"We are having trouble finding it," said Josh O'Byrne, G10 currency strategist at Citi, adding that, if anything, sterling is on the strong side.

The pound was also a third of a percent higher at 71.67 pence per euro, despite the common currency hitting a two-week high against the dollar.

British economic data this week was mixed. Retail sales fell unexpectedly in March, but minutes from the Bank of England's last policy meeting showed the central bank saw a chance that inflation could rebound faster than expected.

Traders will be firmly focused on the election campaign next week. One potential twist could come from the announcement from HSBC, Europe's largest bank, that it is reviewing whether to move its headquarters out of Britain following regulatory and structural changes in the industry.

The main economic data releases will be the first reading of first quarter gross domestic product (GDP) on Monday, and the first glimpses into manufacturing and service sector activity in April with Friday's purchasing manager index reports. (Editing by Hugh Lawson)