The pound climbed higher than $1.41 today for the first time in more than two months.
Sterling was buoyed by economic optimism, a weaker dollar and market relief that a Scottish independence referendum looks unlikely in the near-term.
Pro-independence parties won a majority in Scotland’s parliament on Saturday, paving the way for a political battle with Boris Johnson over the future of the UK.
But the pound strengthened as market participants did not interpret this as a near-term risk, helped by Scottish leader Nicola Sturgeon’s commitment to tackling the pandemic first.
“The market has basically judged that she’s certainly not walking away with a very strong mandate for an imminent referendum,” said Ned Rumpeltin, head of European currency strategy at TD Securities.
Any second Scottish referendum needs approval from the UK government and Johnson has ruled this out, saying that the country needs to focus on more pressing concerns.
The pound was up 0.8 per cent to more than $1.41, which analysts say was also due to dollar weakness, as the greenback dropped to a two-month low after a disappointing US employment report.