The pound has gained ground against a faltering dollar on track for its worst week since July, as the allegations against US president Donald Trump continue to weigh on the currency.

Sterling regained a foothold above $1.30, up 0.6% on the day at $1.302, clawing back ground lost in yesterday's recovery rally for the dollar and US markets.

The dollar has now given up all the gains made since Donald Trump's shock election as president in November, with allegations the president tried to interfere in a federal investigation of former White House national security adviser Michael Flynn.

The news has weighed on both the dollar and stock markets, as investors fear the allegations could at the least delay Trump's progress on tax cuts and infrastructure spending, or even lead to his impeachment.

Paresh Upadhyaya, director of currency strategy at fund group Pioneer Investments, said this week's fall for the dollar was an acceleration of a trend that had been building since the turn of the year.

'The currency markets were the first asset class to dial back expectations of full passage of Trump's economic agenda since mid-January,' he said.

'The failure to repeal and replace Obamacare in the first pass triggered downside expectations of lower corporate and personal income tax cuts. The political woes of late accelerated declining expectations of Trump reforms.'

The FTSE 100 shrugged off the strong pound to rise 25 points, or 0.4%, to 7,463, clawing back some of yesterday's losses. A strong pound tends to hurt the index, whose members rely on overseas markets for around three-quarters of their earnings.

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