CitiGroup, the globally acknowledged financial institution said in a recent report that the Pound Sterling will be the global “safe haven” currency of 2014 as Britain’s economy becomes stronger on the back of massive investments. The pound, supported by a run of positive economic data, climbed to a two-year high against the dollar on Friday, rising to $1.6578. “The UK economy is recovering faster than people expected, and we think that continues next year,” said Mark Schofield, head of macro research at Citigroup.

According to the report, Traders have pulled billions of pounds out of emerging markets this year, where growth has slowed, and ploughed it into the British currency. Schofield said this trend was likely to continue as concerns about political stability in the US and worries over eurozone growth weigh on the dollar and euro next year. “People have been very bullish on dollars and been wrong, and you’ve got a lot of US political issues that are still worrying. France is flirting with recession, and Europe has a lot of concerns over its growth outlook … so it’s very difficult to see where capital is going to flow, other than sterling,” he said.

Citigroup predicts the pound will rise to $1.70 against the dollar by the end of next year, up 3pc from its current level. It also believes sterling will climb to €1.25 against the euro, from a current level of €1.19. Schofield said the pound could even climb to $1.80 against the dollar by the end of 2014. “The $1.70 level would be the highest we’ve traded for some time, certainly in the post-crisis world. If it gets through that level, technically there’s not a lot stopping it from going higher (especially if) you get clearer signs of a long term structural recovery in the UK, or an uptick in US political concerns,” continued Schofield.