Sterling hits strongest level since Feb 2020 versus euro, drops vs dollar

LONDON: The pound extended recent gains to hit its strongest level since February 2020 against the euro on Friday, but it fell versus the dollar after better-than-expected US payrolls data boosted the US currency.

The pound has been a strong performer in recent weeks as COVID-19 cases, while still high, have fallen and high vaccination rates have allowed the British government to lift most social-distancing rules.

At 1456 GMT, the sterling was on track for a 0.6% weekly gain versus the euro - its third consecutive weekly rise and the biggest since May. It was up 0.2% on the day at 84.79 pence per euro, having hit 84.7 earlier in the session - the pound’s strongest since February 2020.

Versus the dollar, it was down 0.4% at $1.3866, set to end the week slightly lower. This drop was less severe than other risk-sensitive currencies - such as the Australian and New Zealand dollars - which were also hurt by the dollar’s gains.

“The main driver for the GBP’s recent rebound has been encouraging COVID data from the UK which has diminished downside risks posed by further disruption from the Delta variant,” wrote MUFG currency analyst Lee Hardman in a note to clients.