LONDON: The British pound climbed above $1.39 on Monday for the first time in nearly three years, lifted by broad-based dollar weakness as well as by hopes for the end of a third national lockdown.
The currency has been a key gainer against a struggling greenback this month as the aggressive rollout of the COVID-19 vaccination programme in the United Kingdom raised hopes that its economy will be able to recover more swiftly than its European peers.
British Prime Minister Boris Johnson will judge this week how fast England can exit its COVID-19 lockdown after vaccinating 15 million of its most vulnerable people.
“GBP continues to reap the dividends of a successful vaccine roll-out and momentum is building towards a re-opening of the economy - probably starting with schools on March 8th,” said Chris Turner, Global Head of Markets at ING.
Britain’s Brexit deal with the European Union has also removed some pressure from the currency.
The reopening of the economy following the post Brexit re-rating could likely support sterling towards $1.40, ING told clients in a note.
Britain has vaccinated 15.062 million people with a first dose and 537,715 with a second dose, the fastest rollout per capita of any large country. Britain expects its weekly supply of COVID-19 vaccines to increase over time, Health Secretary Matt Hancock said on Monday.
England, which is home to about 85% of the UK population, launched a hotel quarantine system on Monday, demanding that passengers arriving there from any of 33 “red list” countries spend 14 days in a hotel room under new border restrictions designed to stop new variants of the coronavirus.
Sterling was up 0.3% at $1.3895 at 0903 GMT, not far from its highest level since late April 2018 of $1.3915 touched in early London trading. Versus the euro, it was last at 0.1% higher at 87.35 pence, after hitting a nine-month high of 87.24 pence.