British pound hits new high against USD since 2018

The British pound increase to 1.3855 against the US dollar, marking the highest level since April 2018.

Wednesday’s spike was mainly driven by the growing number of vaccinations across the UK and the weakening US dollar against the blanket of currencies, Xinhua news agency reported citing local analysts as saying.

“Demand for safe havens, such as the US dollar, has declined in recent weeks as the number of Covid-19 vaccinations surpassed the total number of people infected with the virus,” the City A.M. newspaper said in a report.

“GBP (British Pound) bulls have been flexing their muscles since the start of the year based on relief about the EU/UK trade deal and on hopes that the relatively rapid vaccine rollout program will lead to a fairly fast economic recovery this year,” Jane Foley, head of FX strategy at Rabobank, told the London-based newspaper.

Martin Essex, analyst and editor at DailyFX, a market news and analysis firm, said the “GBP/USD has nudged above the 1.38 level and its trend higher, prompted by a persistently weak US dollar, looks to be propelling the pair towards the 1.40 level medium-term — though a correction could occur before that target is reached”.

Positive American corporate earnings and hopes for a US economic recovery “continue to drive the US dollar lower despite warnings that the risk rally may now be overdone, benefiting currencies like the sterling”, said Essex.