The pound has struck its highest level against the dollar in almost three years on growing hopes the UK’s vaccine programme will help drive a strong economic recovery from coronavirus damage in the months ahead.

Sterling climbed above $1.39 for the first time since early 2018 in Monday’s trading, gaining more than half a cent, hours after confirmation that the government had met its initial COVID-19 vaccine target of 15 million people.

Stock markets also climbed with the FTSE 100 closing the day 2.5% – 166 points – up at 6,756 – its highest level for almost a month.

Among the big winners were energy and travel-related stocks – the latter worst affected by pandemic disruption – with the parent of British Airways, IAG, adding 6.8%.

The lower tier FTSE 250 ended the day 1.8% higher.

The performance marked a post-Brexit rarity for UK markets in that any significant rise in the pound’s value since 2016 has resulted in the FTSE 100 being clobbered due to the high prevalence of dollar-earners in its ranks.

Market experts suggested that the UK’s trade deal with Brussels, combined with expectations of a roadmap from lockdown due next week, meant sterling was now in range of achieving $1.40.

That would be 10 cents shy of its pre-Brexit vote level.

Chris Turner, global head of markets at ING, said: “GBP (the pound) continues to reap the dividends of a successful vaccine rollout and momentum is building towards a re-opening of the economy, probably starting with schools on March 8th.”

The currency has been a key gainer against a struggling greenback this month as the UK’s vaccine programme has raised hopes that its economy will be able to recover more swiftly than its European and many global peers.

Sterling hit a nine-month high against the euro earlier in the day.

Craig Erlam, senior market analyst at OANDA Europe, said of the day’s deals: “There’s real momentum behind the global recovery trade and with every passing week, it seems investors are becoming more optimistic about it.

“The vaccine rollout is providing enormous encouragement, with the UK surpassing 15 million vaccinations and the topic of conversation finally turning to reopening the economy.

“Cases and fatalities are falling rapidly due to a combination of the vaccine and the lockdown and the progress of the last two months should ensure restrictions are eased for the last time starting in a few weeks.

“The UK economy has suffered worse than most this last 12 months but could now be positioned for a powerful recovery.”

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