THE pound continued to trade below 103p against sterling yesterday, as the British currency rallied against most European currencies. The pound closed at 102.65p from 102.80p the day before.

Sterling, trading at a 15 month high against the German deutschmark, would continue to power ahead as investors took a sanguine view of political risk and looked at the currency's yield attraction instead, analysts said.

"Sterling is the obvious choice in Europe since the other high yielders seem to have had their run, and the market perceives a Labour victory at the next elections as a plus rather than a risk," said Mr Paul Meggyesi, senior currency economist at Deutsche Morgan Grenfell in London.

Many investors have started to concentrate on what seems to have become the political certainty of a Labour government, rather than the problems of Prime Minister John Major's ailing Conservative government.

Mr Major's policy of paralysing European Union business until an export ban on British beef is lifted has done nothing to improve his fortunes with the electorate and failed to stir market excitement.