The British pound is poised to test a six-year high against the US dollar, Barclays says, as futures traders increased bets it would strengthen after it fell too far, too fast. The pound this month reached its most oversold level since March last year as it fell 1 per cent, the worst performance among major currencies. There’s no reason why we can’t see a retest of the multi-year highs MITUL KOTECHA, BARCLAYS Sterling dipped to a four-month low on August 14, breaching its 200-day moving average, after Bank of England governor Mark Carney said policymakers were focused on "weak" wage growth in gauging interest rate increases. It has tumbled 2.7 per cent since touching US$1.7192 on July 15, its highest level since October 2008. Despite the warning on rates, traders still see the British central bank's odds of increasing its benchmark by year-end at 23 per cent, compared with 1 per cent odds for the United States Federal Reserve, overnight-index swaps data showed. The pound gained 0.2 per cent on Monday, the most in two weeks, after Carney told The Sunday Times newspaper officials might lift borrowing costs before seeing a recovery in wages. "There's no reason why we can't see a retest of the multi-year highs given the fact that we expect the Bank of England to [raise] rates earlier, and positioning has now squared off," said Mitul Kotecha, the Singapore-based head of Asia-Pacific foreign-exchange strategy at Barclays. "The 200-day moving average looks like a fairly good level of support." Barclays said the BOE would raise rates in November, while the Fed waited until June next year. It forecast the pound to strengthen to US$1.71 by the end of next month, and it could "overshoot" that, said Kotecha. The pound bought US$1.6718 in Tokyo yesterday, after dipping to as low as $1.6658 on August 14. It completed a sixth five-day decline last week, the longest run in four years. The 14-day relative-strength index on the pound reached 26.07 on August 14, below the 30 level that some traders consider oversold, and near the 25.95 level reached on August 1 that was the least since March 13 last year. Then, the pound rallied as much as 5.8 per cent to its peak in June. Speculative investors increased bullish bets by 55 per cent from the lowest level in almost six months, figures from the Commodity Futures Trading Commission showed. Futures bets for the pound to gain against the dollar outnumbered wagers for it to drop - called net-longs - by 18,799 contracts as of August 12, according to the data. That is up from 12,121 the previous week, the lowest since February 11. Net longs reached 56,412 contracts on July 1, the most since December 2007. Average weekly earnings fell 0.2 per cent in the three months to June, the Office for National Statistics reported on August 13. BOE policymakers said on the same day they saw annual wage growth in the fourth quarter at about 1.25 per cent, down from 2.5 per cent estimated in May. "We have to have the confidence that prospective real wages are going to be growing sustainably" before raising borrowing costs, Carney said.