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.
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.
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.”