The British Pound Sterling tied with the New Zealand Dollar as the best performer against the Greenback last week, rising by a substantial +2.1% on the week.

This helped the Pound recover most of the significant losses that it incurred the previous week, and even sent the GBPUSD rate up as high as 1.6088 in this Monday's session. The rate now seems to have its sights set on testing the key 1.6106 high last seen on October 15^th.

The sharp rise seen last week was largely attributed to an upgrade to the outlook for Britain's sovereign debt rating by the S&P rating agency, although some positive growth and consumer confidence data from the U.K. may also have contributed to bullish sentiment for Cable.

S&P Raises U.K. Debt Rating Outlook to Stable

Citing the resolve of the U.K. government in dealing with their record deficit, the Standard and Poor's rating agency, commonly known as S&P, raised its outlook for the U.K.'s current triple A debt rating from "negative" to "stable" last week.

In doing so, the ratings agency stated that,

"In our opinion, the decisions reached by the UK Coalition Government in its 2010 spending review reduce risks to the Government's implementation of its June 2010 fiscal consolidation program."

The agency also added that,

"The coalition parties have shown a high degree of cohesion in putting the UK's public finances onto what we view to be a more sustainable footing."

As a result, the influential ratings agency upgraded its rating outlook to stable and thereby affirmed the U.K.'s rating on its sovereign debt of AAA/A-1+.

The rating agency had originally assigned the negative outlook on the U.K. government debt back in August of 2009. S&P now joins Moody's and Fitch in assigning Britain a stable outlook for its sovereign debt rating.

U.K. Growth and Consumer Confidence Exceeds Expectations

Another positive factor for Cable last week was news released last Tuesday that the U.K. GDP had risen by an impressive +0.8% for the quarter that was more than twice the market's consensus that was only looking for a more modest +0.4% rise.

On the other hand, U.S. Advance GDP data then disappointed the market by coming out on Friday showing a gain of only +2.0% compared with an anticipated +2.1% rise. Even worse news for the Greenback was the fact that the number's former result was revised substantially downwards to +1.7% from the +2.4% level.

In other good economic news out for Sterling last week, the U.K. GfK Consumer Confidence survey showed some improvement by coming out at -19 that compared favorably with the anticipated reading of -22 the market was looking for.