LONDON, June 27 Reuters The pound headed for its biggest daily gain against the dollar in two weeks on Tuesday, boosted by a modest return of risk appetite after an aborted mutiny by mercenaries in Russia at the weekend briefly threatened to upend markets.

Investors are still trying to determine how Moscow will respond to the aborted uprising by the heavily armed Wagner Group over the weekend, bringing most of the focus back to the global economy and the outlook for interest rates, for now.

Sterling was last up 0.14 against the dollar at , on course for its largest oneday rise since June 16. Against the euro , sterling was flat at 85.80 pence.

The Bank of England raised rates on June 22 by 50 basis points to 5, in light of evidence that the inflation of the last two years is becoming more entrenched in the economy and therefore harder to fight.

The pound is closing in on a gain of 5.4 versus the dollar in the first six months of this year which would mark its best firsthalf performance since 2017, when it rose 5.65.

Analysts say that at some point, higher interest rates and a costofliving crisis will take their toll on the UK economy, which will eventually weigh on the currency.

Interest rates are good for a currency as long as the economy is able to withstand those higher rates. The question is at what point will higher rates have more of an negative impact on growth in the UK? That will come, as we all know, with monetary policy tightening, MUFG currency…