Sterling fell as much as 0.8 per cent against the dollar today as a fresh sell-off of US Treasury bonds pushed yields higher today.
After trading above $1.40 overnight, cable dropped back today, and is now sitting just below $1.39.
Despite the tumble, the pound is still set for a week of solid gains against the dollar, continuing its recent upwards trend.
Over the last three months, the pound has picked up 6.0 per cent against the Euro, as well as 4.0 per cent against the dollar.
The UK’s impressive vaccination programme, which has seen some 23m people already receive at least their first dose of a Covid-19 vaccine, has been the main factor behind the upwards drive.
It has also led to the rare sight of equities and cable both climbing at the same time.
Once again, the FTSE pushed higher this afternoon, picking up 0.2 per cent. It is now appoaching the 6,750 level.
“The weaker pound is largely a function of higher yields pushing the U.S. dollar into positive territory,” said Neil Jones, head of foreign exchange sales at Mizuho Bank. “The market is looking to hedge inflation fears again by buying U.S. dollars.”