Sterling knocked back by bond rout By Reuters

By Joice Alves

LONDON (Reuters) – Sterling fell against a stronger dollar on Friday, retreating from a three-year high touched earlier this week, as a rout in global bond markets sent yields flying and hurt the pound.

The pound has strengthened about 2% this year against the dollar and the euro as traders expect Britain’s speedy vaccine roll-out will help the economy rebound from its biggest contraction in 300 years.

Analysts attributed sterling’s fall on Friday to the sell-off in bond markets.

Benchmark U.S. Treasury yields vaulted to their highest since the pandemic began, driven by the prospect of accelerating growth and inflation that could trigger a faster rise in interest rates than many expect. Gilt yields also rose sharply on Thursday.

After rising above $1.42 for the first time in three years earlier this week, the pound fell to $1.3901 at 0803 GMT, its lowest since Feb. 18. It was 0.4% lower at $1.3957 at 0937 GMT