By Joice Alves

LONDON (Reuters) – Sterling edged higher against both the euro and the dollar on Thursday, reaching its highest in almost a year against the single currency, amid expectations of a faster economic recovery in Britain thanks to its successful COVID-19 vaccinations.

The pound rose 0.3% to 86.55 pence against the euro at 1115 GMT, its highest since March 6, 2020.

The British currency has risen more than 2% against the euro in February as the aggressive rollout of the COVID-19 vaccination programme in the United Kingdom raised expectations its economy will recover faster than that of its European peers.

Versus the dollar, sterling climbed this week above $1.39 for the first time since April 2018. It was 0.6% higher on Thursday at $1.3946.

Sterling 18 Feb
https://fingfx.thomsonreuters.com/gfx/mkt/gjnvwzjgdpw/Sterling%2018%20Feb.png

Britain reported this week that it has vaccinated 15.6 million people with a first dose against COVID-19 so far, the fastest rollout per capita of any large country.

COVID vaccination
https://fingfx.thomsonreuters.com/gfx/mkt/rlgpdejwrvo/COVID%20vaccination.png

Neil Jones, head of FX sales at Mizuho Bank, said sterling is benefiting from the fact that the currency market is already looking at a “post-COVID world”.

“The pound is benefiting from its vaccine currency status. Expectations for a more rapid economic recovery are kicking into play”.

Prime Minister Boris Johnson is planning a staged exit from the country’s third national lockdown, which began on Jan. 5, with the battered economy returning to work over the next five months.

Adding to the upbeat mood, a study found that England’s third national COVID-19 lockdown is helping to reduce coronavirus infections, even if the prevalence of cases remains high.

Amid the improved outlook for the economy, sterling has proved to be the most resilient G10 currency versus the greenback, ING strategists said.

“It is a matter of time when GBP/USD breaks above the 1.40 level,” they told clients in a note.

(Editing by Larry King and Gareth Jones)