LONDON: Sterling hit its lowest since end-2020 against the dollar on Wednesday, erasing all its gains for the year as concern about soaring natural gas prices and almost a week of petrol shortages in Britain outweighed a recovery in global equity markets.

The pound generally trades in line with global risk sentiment and was hit by a global equity selloff on Tuesday when investors braced for future rate hikes from global central banks, most notably the U.S. Federal Reserve.

Although stocks staged a recovery on Wednesday, sterling extended its Tuesday losses and fell another 0.7%, to its lowest since Dec. 28 against the dollar at $1.3440.

The two consecutive daily drops - on a two-day basis, the worst since September 2020 - have left the pound flat against the dollar for the year.

Sterling was at one point the best performing G10 currency in 2021, boosted by high expectations for an economic rebound in Britain on the back of the country’s vaccination programme.