The British pound, languishing at an 11-month low against the US dollar, is far from dead. That is the message from options traders and strategists, who expect sterling to be one of the developed world's two best performers in the year ahead versus the greenback. The pound has already rallied against 30 of its 31 most-traded peers the past month, underscore ing the strength of Britain's economy. "I don't think we're dealing with sterling being an unpopular currency, we've just been in a market with a lot of dollar buying," said Stuart Bennett, head of Group of 10 currency strategy at Banco Santander. "If you look at sterling against the rest of the world, it's performing quite well." Britain's gross domestic product will expand 5.6 per cent this year and next, compared with 3.9 per cent for the G10, based on economist forecasts. The growth outlook may help persuade Bank of England policy makers that it is time to begin raising interest rates from a record low, which would further bolster the exchange rate. Bennett said he sees the pound gaining about 4 per cent to US$1.68 and 76 pence per euro by the third quarter of 2015, compared with earlier forecasts of US$1.75 and 73 pence. Since reaching a six-year high of US$1.7192 on July 15, the pound has tumbled almost 6 per cent against the US currency, after touching a low for this year of US$1.5944 on Monday. Sterling fell as parts of Britain's economy, including industrial production and retail sales, slowed. That, in turn, prompted futures traders to push back the likely timing of the BOE's first rate increase since 2007, just as speculation grew for an early boost to the US federal funds rate. While the pound is down 2.4 per cent against the US dollar this year, it has risen against all of its 31 most-traded peers except the Hungarian forint the past month. The pound also benefited as the euro weakened on plans by the European Central Bank to cut rates and expand the region's money supply. Sterling is up 5.4 per cent versus the euro this year, to 78.76 pence per euro, heading for its best annual performance since 2009. "The case for renewed outperformance of the pound versus the European currencies … remains a compelling one," said Bank of America analysts. "The policy divergences between the BOE and its European counterparts continue to widen." Bank of America sees the pound rising versus the dollar and euro by year-end, predicting levels of US$1.62 and 77 pence. Options traders expect the pound to post the second-best performance against the greenback of its G10 peers over the next year, with only the yen seen doing better. Strategists are more optimistic. While currencies such as the franc, yen and euro are seen tumbling more than 3 per cent by the third quarter, the pound is forecast to drop less than 1 per cent in the group's best performance. The one currency it cannot surmount is the dollar. There is about a 58 per cent likelihood the US will lift its target rate from a range of zero to 0.25 per cent to at least 0.5 per cent by September 2015, futures data shows.