Sterling edged higher against both the euro and the dollar today, reaching its highest in almost a year against the single currency, amid expectations of a faster economic recovery in Britain thanks to its successful Covid-19 vaccinations.
The pound rose 0.3% to 86.55 pence against the euro this morning, its highest since March 6, 2020.
Sterling has risen more than 2% against the euro in February as the aggressive rollout of the Covid-19 vaccination programme in the UK raised expectations its economy will recover faster than that of its European peers.
Against the dollar, sterling climbed this week above $1.39 for the first time since April 2018. It was 0.6% higher at $1.3946 today.
Britain reported this week that it has vaccinated 15.6 million people with a first dose against Covid-19 so far, the fastest rollout per capita of any large country.
Neil Jones, head of FX sales at Mizuho Bank, said sterling is benefiting from the fact that the currency market is already looking at a "post-Covid world".
"The pound is benefiting from its vaccine currency status. Expectations for a more rapid economic recovery are kicking into play," he added.
Prime Minister Boris Johnson is planning a staged exit from the country's third national lockdown, which began on January 5, with the battered economy returning to work over the next five months.
Adding to the upbeat mood, a study found that England's third national Covid-19 lockdown is helping to reduce coronavirus infections, even if the prevalence of cases remains high.
Amid the improved outlook for the economy, sterling has proved to be the most resilient G10 currency versus the greenback, ING strategists said.
