LONDON, May 27 Reuters Britain39;s pound headed for a second weekly rise and was close to a onemonth high on Friday, helped by a large government spending package to support households that economists said should support the economy in the short term.

The government on Thursday announced a 25 windfall tax on oil and gas producers39; profits to help fund a 15 billion pound 18.9 billion package of support for households struggling to meet soaring energy bills.

Reaction on currency markets was muted, but analysts said signs of government support, which was mostly targeted at lowerincome households, could lift sentiment towards sterling which has rebounded this week versus the dollar after falling to a twoyear low earlier this month.

Sterling39;s rebound has also been aided by a broad reversal in the U.S. currency, which slipped again on Friday. The UK currency39;s performance against the euro has been much weaker in recent sessions.

The pound was last up 0.2 at 1.2634 after earlier reaching 1.2666. It is on course for a more than 1 gain this week, which followed a 2 rise last week.

Versus the euro, sterling was 0.1 stronger at 84.99 pence but that followed a fall on Thursday.

If the passthrough of looser UK fiscal policy … is marginally tighter monetary policy as a number of forecasters have hinted at then the current composition of inflation largely imported gets leant into by a stronger pound, all else equal, said Simon French, chief economist at Panmure Gordon….