Sterling is on track for its biggest daily gain in three years, rebounding more than 2% as grim U.S. unemployment data weakened the dollar across the board.
The pound is trading above $1.21, after falling as low as $1.14 last week, levels not seen since 1985. It is heading for its best week since 2009, up 4% since Monday.
Sterling has been hammered in recent weeks as fears about the economic impact of the coronavirus pandemic sent investors scrambling for dollars – the world’s most liquid currency and one seen as a safe haven in times of crisis.
The U.S. currency lost some ground against major currencies after data showed an unprecedented surge in Americans filing for unemployment benefits, as firms shut down in an attempt to stem the spread of the virus.
Despite its recent rally, the pound is still down nearly 11 cents from its early March high of $1.32.
Earlier on Thursday the Bank of England said it was prepared to take further action to limit the economic fallout from the outbreak in Britain and held benchmark rates at rock-bottom levels.
The dollar was on track for its biggest weekly fall in more than a decade on Friday as a series of stimulus measures around the world, including a $2.2 trillion U.S. package, helped temper a rout in global markets triggered by the coronavirus pandemic.
An unprecedented jump in U.S. jobless claims on Thursday underscored the virus’ devastating impact on the economy, but a subsequent bounce in Wall Street shares raised hopes that a torrent of selling in risk assets may have run its course for now.