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Pound hits $1.40 for first time in almost 3 years amid COVID-19 vaccine optimism

LaToya Harding
·Contributor
·3-min read
CWMBRAN, WALES – FEBRUARY 17: British Prime Minister Boris Johnson poses with a vial of the Oxford/AstraZeneca vaccine during a visit to the vaccination centre at Cwmbran Stadium on February 17, 2021 in Cwmbran, Wales. The Prime Minister visited the vaccination centre to see the progress of the COVID-19 vaccine roll out in Wales. During the visit he explained that the lifting of the coronavirus lockdown would be “based firmly on a cautious and prudent approach”. (Photo by Geoff Caddick – WPA Pool/Getty Images)
UK prime minister Boris Johnson poses with a vial of the Oxford/AstraZeneca vaccine during a visit to the vaccination centre at Cwmbran Stadium on February 17, 2021 in Cwmbran, Wales. He said measures in England will be eased “cautiously”. Photo: Geoff Caddick – WPA Pool/Getty Images

The pound hit a fresh milestone against the dollar (GBPUSD=X) on Friday, reaching $1.40 for the first time since April 2018.

Sterling shrugged off disappointing UK data amid a wave of vaccine optimism and hopes of eased lockdown restrictions in the country.

The pound hit $1.40 on Friday, its highest level since April 2018.
The pound hit $1.40 on Friday, its highest level since April 2018.

Earlier this week, UK prime minister Boris Johnson said measures in England will be eased “cautiously” after scientists tracking the health crisis confirmed there had been a "strong decline" in levels of coronavirus infections in England since January.

The PM said he would set out "what we can" in a road map for easing restrictions this coming Monday. "We want to be going one way from now on, based on the incredible vaccination rollout," he said.

At the weekend ministers were hopeful that schools could reopen from 8 March, with non-essential shops and retailers to follow, and later pubs and restaurants.

WATCH: Boris Johnson warns of 'cautious' approach to easing lockdown

Some 16 million people in Britain have now received their their first COVID-19 vaccine after the government met its target of inoculating 15 million people, in the top four priority groups, by 15 February.

The country is much further advanced in its rollout than anywhere in Europe, after becoming the first country to approve the Pfizer (PFE) jab. The vaccine is now being expanded to over-65s and the clinically vulnerable.

As part of the vaccines delivery plan, the government hopes that all adults can be vaccinated by the autumn.

Seven mass vaccine centres have also now opened in England.

Ashton Gate football stadium in Bristol, Epsom racecourse in Surrey, the Excel Centre where London's Nightingale hospital is based, Newcastle's Centre for Life, the Manchester Tennis and Football Centre, Robertson House in Stevenage and Birmingham's Millennium Point will offer vaccines to people aged 80 and older, along with health and care staff.

The government plans to have a total of 2,700 vaccine sites across the country.

READ MORE: UK 'confident' of COVID-19 vaccine supplies after EU guarantees

The rallying pound also came as data released on Friday showed that the UK government borrowed another £8.8bn ($12.3bn) last month, much less than economists were expecting.

The Office for National Statistics (ONS) revealed that public sector net borrowing stood at £8.8bn in January. Economists had forecast borrowing of £25bn.

While the monthly figure was below forecasts, the UK's national debt still stands at £2.1tn. The ONS said debt as a percentage of GDP hasn't been this consistently high since the 1960s.

Meanwhile, UK retail sales fell sharply last month as a return to lockdown stopped people spending.

Sales fell by -8.2% in January, however, economists had forecast a -2.5% month-on-month decline. The ONS said the data showed "a steep decline in the sector, as it was again affected by coronavirus (COVID-19) restrictions."

However, sterling was not as buoyant against the euro (GBPEUR=X), retreating from Thursday’s 11-month-plus highs as it fell 0.15% to €1.1538.

It’s fall against the euro came as factories in the Eurozone thrived, according to IHS Markit’s survey.

Chris Williamson, chief business economist at IHS Markit, said: “Factory output grew at one of the strongest rates seen over the past three years, thanks to another impressive performance by German producers and signs of strengthening production trends across the rest of the region.”

WATCH: What UK government COVID-19 support is available?