The pound has hit $1.40 against the US dollar for the first time in almost three years, on expectations that the UK’s Covid-19 vaccination rollout will help the economy to rebound more quickly.

Sterling hit $1.4005 during early trading on Friday morning, a rise of 0.2% on the day, touching a level not reached since April 2018.

The UK currency has been rising against the dollar and the euro in recent days, despite official figures confirming that the UK economy experienced its biggest annual contraction in 300 years in 2020.

UK gross domestic product fell by 9.9% in 2020, according to the Office for National Statistics, as the pandemic affected every sector of the economy.

Despite this, sterling is the best-performing currency among the G10 group of advanced economies this year, partly thanks to the speed of the UK’s vaccination programme.

More than 15 million people in the UK had been offered their first coronavirus vaccine by the middle of February, leading traders to bet that the economy would be able to reopen more quickly than in other European countries, where the vaccination rollout has been slower.

The agreement of a Brexit deal with the EU, Britain’s largest trading partner, before Christmas has also provided some relief for the pound, despite evidence of some difficulties in the new trading regime.

In addition, the US dollar has been under pressure in recent days after two weeks of disappointing jobs data in the US, giving the impression that the labour market is not improving as expected.