By Joice Alves

LONDON (Reuters) – Sterling strengthened on Monday as investors returned to risk assets on hopes for more stimulus in the United States, while Britain’s COVID-19 vaccine rollout push over the weekend also offered support to the pound.

Optimism about a $1.9 trillion fiscal stimulus plan to help revive the U.S. economy sparked interest for riskier assets with sterling also benefiting.

Britain’s COVID-19 vaccine rollout gathered pace on Saturday, with 5.9 million people now having had a first dose.

“Investors may start to sense we are turning the corner,” said Neil Jones, head of FX sales at Mizuho Bank.

The pound was flat at $1.3677 against the safe-haven dollar at 0920 GMT, after hitting $1.3724 in morning trade, recovering from a slide to $1.3636 on Friday.

It edged 0.1% higher against the euro to 88.87 pence, not far from an 8-month high of 88.30 pence hit last week.

Mizuho’s Jones said that sterling was performing better on Monday thanks to “a return to a more risk on preferred market backdrop”.

“Asset prices are trading firm, volatility is lower and yields are pushing up, putting the USD on the back foot and forcing the pound higher,” he said.

Sterling dropped on Friday after figures showed Britain’s third national lockdown sparked the sharpest drop in business activity since May and retail sales remained weak in December.

(Editing by Kirsten Donovan)