Pound hits three-year high on vaccination hopes

The pound has hit its highest level against the dollar in nearly three years, amid rising optimism about an end to lockdown in the UK.

It surpassed $1.39 on Monday, while also hitting a nine-month high against the euro at €1.147.

More than 15 million people have now had their first Covid jab, raising hopes that restrictions can soon be eased and the economy start to recover.

Boris Johnson will set out his plan for exiting England's lockdown next Monday.

Chris Turner, global head of markets at ING, said: "[The pound] continues to reap the dividends of a successful vaccine rollout and momentum is building towards a reopening of the economy - probably starting with schools on 8 March."

The UK's main share index, the FTSE 100, also climbed on Monday, rising by 2.6%.

On Monday, the prime minister said his plan for exiting lockdown would be "cautious but irreversible".

He said it would target dates for changes "if we possibly can", but he warned high rates of infection could lead to delays.

The UK has vaccinated more than 15 million people with a first dose and 500,000 with a second dose, the fastest rollout per capita of any large country.

England, which has about 85% of the UK population, also launched a hotel quarantine system on Monday.

Passengers arriving from any of 33 "red list" countries will have to spend 14 days in a hotel room under new border restrictions designed to stop new variants of the coronavirus.

Markets boost

European stock markets were also higher because of optimism about the rollout of Covid-19 vaccines and new fiscal aid for the US from Washington.

Spain's Ibex 35 climbed 2% while the French Cac 40 gained 1.7%. US markets are closed.

Oil prices meanwhile hit a 13-month high, driving up shares in energy companies such as BP and Royal Dutch Shell.

"Natural resource stocks are benefitting from the wider optimism that the global economy will recover and in turn, mineral demand will rise," said David Madden from CMC Markets.