Sterling gains against euro on UK Covid-19 recovery hopes      

Sterling rose to an 18-month high against the euro as signs of UK economic recovery and falling Covid-19 rates spur expectations of a far earlier interest rate lift-off compared to the eurozone. File picture

Sterling rose to an 18-month high against the euro as signs of UK economic recovery and falling Covid-19 rates spur expectations of a far earlier interest rate lift-off compared to the eurozone.

Against the dollar, the pound hovered near two-week highs, however, after comments this week by regional Federal Reserve presidents, Rafael Bostic of the Atlanta Fed and Eric Rosengren from Boston, strengthened bets the US central bank would kick off tapering by year-end or even sooner.

Sterling has performed well in recent weeks as a fall in Covid cases has allowed the British government to lift most social-distancing rules, while the Bank of England last week flagged how it might gradually rein in stimulus.

Consumer spending

British consumer spending rose strongly in July, data from Barclaycard showed, up 11.6% on pre-pandemic levels. Spending in shops too increased by 6.4% in July from year-ago levels, the British Retail Consortium said..

Germany's ZEW survey, on the other hand, showed investor sentiment had deteriorated for the third month straight in August. 

Sterling traded at 84.68p against the euro, close to an earlier 84.5p level that was the highest since last February. It has strengthened about 0.8% in August so far against the euro, following from three straight months of gains. 

• Reuters