LONDON, Nov 23 Reuters Sterling on Thursday rose to its highest against the dollar since early September after data showed British companies returned to growth in November, fuelling hopes Britain will avoid a recession.

A day after finance minister Jeremy Hunt delivered a budget update, the SP GlobalCIPS UK Composite Purchasing Managers39; Index PMI showed a preliminary reading above the 50 threshold for growth for the first time since July.

Sterling climbed 0.5 against the dollar to 1.2560. It touched its highest of 1.2575 since Sep 6 right after the PMI data.

Against the euro , the pound rose 0.24 to 86.93 pence, having briefly touched a nineday high against the single currency.

Novembers flash PMIs once again support our view that the UK economy is merely in a state of stagnation as opposed to outright contraction, said Simon Harvey, Head of FX Analysis at Monex Europe.

In conjunction with structural supply issues which should keep shortterm UK rates higher for longer relative to the euro zone, we expect the UKs better relative growth prospects to support renewed upside in sterlingeuro.

But the official outlook for the British economy now anticipates far less growth than previously forecast.

On Wednesday British finance minister Jeremy Hunt delivered a budget update and said gross domestic product is expected to grow by 0.7 in 2024, compared with the expansion of 1.8 forecast in the previous outlook in March from the Office for Budget Responsibility OBR,…