Monday 22 February 2021 7:19 pm

Sterling rises to a three-year high

Sterling rose to a three-year high against the dollar today as investors bet on the UK’s vaccination success bringing about a speedy economic recovery.

Sterling achieved $1.4073 against the dollar this afternoon. It reached its highest levels since April 2018 when it broke the $1.40 barrier on Friday and has risen 2.9 per cent against the dollar this year alone.

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The recent strengthening of the pound was attributed to the UK’s excellent vaccination program, which has given first doses of a Covid-19 vaccine to 17.7m people or over a quarter of the total population.

Versus the euro, sterling was up around 0.2 per cent at 86.405 pence per euro, having reached a one-year high earlier in the day.           

The UK’s success in signing a Brexit trade deal at the end of 2020 has also helped to rally the pound, along with wider certainty that the Bank of England will not introduce negative interest rates.

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The incredible success of the pound this year has led to talk of a possible correction.

Ned Rumpeltin, head of European currency strategy at TD Securities, said: “We’ve clearly started to price in a lot of good news, After such strong momentum and a very large move, you’ve got to be careful in terms of calling the top too prematurely but it does feel like the conditions are ripening for a broader correction to come through.”

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