(Updates prices, adds details on weekly move, speech by BoE's Haldane)
By Patrick Graham
LONDON, July 15 (Reuters) - Expectations of a period of relative domestic political and economic calm kept sterling on course for its best week since 2009 on Friday, although broader risks from last month's Brexit vote prevented a break past two-week highs above $1.34.
Many analysts have recommended selling any rallies in the pound in anticipation of cuts in Bank of England interest rates and a slowdown in growth in the months ahead, with a number of major banks predicting it will fall to $1.25 or lower.
But the Bank shocked markets - and sent the pound up to 2 percent higher - by stopping short of cutting interest rates on Thursday as it awaits the first numbers on the economy taken since the June 23 referendum.
Added to the swift appointment of new Prime Minister Theresa May and her cabinet, that points to a couple of weeks in which those betting on further weakness could be squeezed in a market already leaning massively against the pound.
In morning trade in London, sterling was up half a percent at $1.3414, having earlier gained as much as 1 percent on the day. It gained 0.3 percent to 83.07 pence per euro.
"We think that extremely short positioning is going to play the dominant role in the next few weeks," said Valentin Marinov, Head of G10 FX research at Credit Agricole in London.
"Unless the data turns very, very weak in the coming weeks there is scope for further consolidation."
Sterling forward interest rates, which had been pricing in a strong chance of a cut in the bank's 0.5 percent base rate to zero by September, now only fully price in a single quarter-point cut.
The Bank of England is scheduled to release a revised version of a speech given by its chief economist, Andy Haldane, during a visit to Wales on June 30, at 0930 GMT on Friday.
Haldane has taken a wide-ranging view of the challenges facing the central bank in the past, and in his first public remarks since the EU referendum there will be keen interest in whether he floats possible measures the BoE could take next month to ease the economic hit from the vote to leave.
Friday's rise put sterling 3.5 percent higher on the week - its largest weekly gain since May 2009. But traders said there would be strong resistance to a break above $1.35.
"I do think this rally is an opportunity to reload shorts," said a senior trader with one international bank in London. "Everyone's assumption is that there is a lot of bad news to come this year, so it does just seem like a matter of time before we go lower again." (editing by John Stonestreet)