Sterling rises to 3-week high

The pound climbed to a three-week high on Thursday as the dollar tumbled against its rivals after the Federal Reserve rolled out a $2.3 trillion effort to bolster local governments and small and mid-sized businesses in its latest move to support the US economy.

The central bank's announcement came as data showed that the number of Americans seeking unemployment benefits topped 6 million for the second straight week, with businesses closed across the country in an attempt to stem the spread of the coronavirus.

The pound, which was already stronger on the day, extended gains to hit a session high of $1.2481, up 0.8% on the day as risk appetite improved across the board following the dollar's fall.

"The dollar is looking very vulnerable here in the short-term as the Fed has impressed and this could keep the pressure on the greenback," said Edward Moya, a senior market analyst at OANDA based in New York. News earlier that the Bank of England has agreed temporarily to lend money to the government to fight the spread of COVID-19 if funds cannot immediately be raised from debt markets had little impact on UK bond and currency markets. While the pound has generally held firm against the dollar in recent days, it has failed to break above the $1.25 line.

Domestic data offered little support. Gross domestic product rose by 0.1% in the December-February period, the Office for National Statistics said. Versus the euro, the pound struggled to crack through the 87.50 pence level with some analysts remaining bearish about the British currency's prospects against the euro as some European countries such as Austria and Denmark plan their exit strategies from a lockdown while the United Kingdom is planning on extending a similar shutdown.