Recovery hopes lift pound: Sterling hits its highest level against the dollar since April 2018
The pound has motored up against the dollar as the UK’s rapid vaccine rollout raised hopes for an economic recovery,
Sterling rose above $1.38 for the first time since April 2018. Against the euro it was hovering around an eight-month high as the eurozone has been beset with medical and political problems.
Traders have been buoyant about the pound’s prospects, given the UK’s coronavirus vaccine rollout has been faster than Europe and much of the rest of the world.
On the rise: Sterling hit $1.3797, its highest level since April 2018. Against the euro it was hovering around an eight-month high
Only Israel and the United Arab Emirates have been quicker to administer the jab.
The UK has also ramped up measures against the virus with travellers who lie about whether they have been to mutant virus hotspots facing ten years in prison.
Charles Diebel, head of fixed income at Mediolanum Asset Management, said: ‘Hopefully the UK recovers at a faster pace, once immunity is established.
Thereby the chances of an economic recovery accelerating are higher in the UK than in Europe.’
Some traders believe the pound could reach $1.40 this year, although reports that UK companies are struggling to export goods post-Brexit could knock this prospect off-course.
Economists also believe that the huge savings accumulated during the pandemic will mean the UK gets another boost when people start to spend more freely again.
The Bank of England did its bit last week when it pushed back the prospect of negative interest rates.
Markets were pricing in negative interest for 2021, but that possibility has receded.