Pound hits three-year high on vaccination hopes

The pound has hit its highest level against the dollar in nearly three years, amid rising optimism about an end to lockdown in the UK.

It surpassed $1.39 on Monday, while also hitting a nine-month high against the euro at €1.147.

More than 15 million people have now had their first Covid jab, raising hopes that restrictions can soon be eased, and the economy start to recover.

Boris Johnson will set out his plan for exiting England's lockdown next Monday.

Chris Turner, global head of markets at ING, said: "[The pound] continues to reap the dividends of a successful vaccine rollout and momentum is building towards a reopening of the economy - probably starting with schools on 8 March."

The UK's main share index, the FTSE 100, also climbed on Monday, rising by more than 2%.

On Monday, the prime minister said his plan for exiting lockdown would be "cautious but irreversible".

He said it would target dates for changes "if we possibly can", but he warned high rates of infection could lead to delays.

The UK has vaccinated more than 15 million people with a first dose and 500,000 with a second dose, the fastest rollout per capita of any large country.

England, which has about 85% of the UK population, also launched a hotel quarantine system on Monday. Passengers arriving from any of 33 "red list" countries will have to spend 14 days in a hotel room under new border restrictions designed to stop new variants of the coronavirus.

Stock markets around the world are also heading higher because of optimism about the rollout of Covid-19 vaccines and new fiscal aid for the US from Washington.

Tensions in the Middle East meanwhile have driven oil prices to a 13-month high.

As more people are vaccinated across key markets such as the US, and with US President Joe Biden looking to pump an extra $1.9 trillion in stimulus into the economy, so-called "reflation" trade has gathered momentum in recent days.

European indexes were up on Monday afternoon, with Spain's Ibex 35 up 1.8% and the French Cac 40 1.5% higher.

Posted on Feb 15, 2021.

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