Sterling hit its highest level in more than two months versus the euro on Wednesday as investors were optimistic that a vaccine against COVID19 would provide a lifeline to the UK economy and more hopeful about the chances of a Brexit deal.
Global markets have surged this week in response to an announcement on Monday by Pfizer Inc that its experimental COVID19 vaccine is more than 90 effective.
The pound benefited as investors judged that a possible vaccine would be a particular boon to the UK, which has seen its economy ravaged by the coronavirus.
Since Britain has been disproportionately hit by the virus, it will be disproportionately helped by a vaccine, wrote Marshall Gittler, head of investment research at BDSwiss Group.
Poundtraders had feared that the economic fallout from a second nationwide lockdown, combined with the possibility of Britain and the European Union failing to agree on a postBrexit trade deal, could push the Bank of England to introduce negative rates in January.
A Covid19 vaccine hope would lift the very heavy clouds that have hung over the U.K. economy since this spring, also likely banishing any thoughts of a negative rate policy from the BoE, John Hardy, head of FX strategy at Saxo Bank said in a note to clients.
The pound was up 0.1 on the day at 1.3291 at 0850 GMT, up more than 1 since Monday and at its highest since September.
Versus the euro, it was up around 0.2 at 88.785 pence per euro, having also touched its highest since early…