London: The pound headed for its biggest weekly gain against the dollar in five months as opinion polls eased concern this year's election may produce a government without the majority needed to cut the budget deficit.

The British currency rose for a fourth day against the euro, its longest winning streak since January, as the Metro newspaper said a Harris survey showed the opposition Conservatives recently increased their lead by two percentage points over Prime Minister Gordon Brown's Labour Party to 10 percentage points.

The pound also gained against the Japanese yen as a report showed that manufacturing in the UK grew more than forecast in March.

"The pound is being driven by the apparent shift in the polls," said Gavin Friend, a markets strategist at National Australia Bank Limited in London.

"Data has been reasonably strong this week, also supporting sterling."

The pound rose 0.3 per cent to $1.5222 as of 11am in London, a gain of 2.2 per cent in the week. It added 0.3 per cent to 88.71 pence per euro, 1.5 per cent stronger since March 26.

Strong government

The pound fell 5.9 per cent against the dollar in the first quarter amid concern that this year's parliamentary election, which must be held by June, will fail to produce a government strong enough to tame the budget gap, the biggest in the Group of Seven Nations.

Sterling has fallen against all its 16 most-traded peers this year. Some UK business leaders are backing David Cameron's Conservatives after it said it would partially reverse an increase in payroll tax planned by Prime Minister Gordon Brown's Labour government.

In a letter to the Daily Telegraph newspaper, 23 company bosses, including Mick Davis, chief executive officer of Xstrata Plc, Justin King, CEO of J Sainsbury Plc, and Christopher Gent, chairman of GlaxoSmithKline Plc, said the government should follow the example of business and cut costs to avoid the tax.

UK manufacturing rose to 57.2 in March from 56.5 in February, the Chartered Institute of Purchasing and Supply and Markit Economics said.

That was the highest since October 1994.