* Graphic: World FX rates in 2020 tmsnrt.rs\/2egbfVh<\/p>\n
* Graphic: Trade-weighted sterling since Brexit vote tmsnrt.rs\/2hwV9Hv<\/p>\n
LONDON, March 12 (Reuters) – Sterling fell against a stronger dollar on Friday as Treasury yields climbed, but the pound was still on track for weekly gains amid hopes for an economic recovery following Britain\u2019s speedy vaccination programme.<\/p>\n
Sterling was down 0.5% against a stronger dollar at $1.3925 as U.S. Treasuries sold off during early London trading, pushing the yield on the benchmark note above 1.60%.<\/p>\n
\u201cThe weaker pound is largely a function of higher yields pushing the U.S. dollar into positive territory,\u201d said Neil Jones, head of FX sales at Mizuho Bank. \u201cThe market is looking to hedge inflation fears again by buying U.S. dollars.\u201d<\/p>\n
Sterling was still on track for weekly gains against the dollar, amid hopes that Britain\u2019s relatively successful COVID-19 vaccine programme would support its economic recovery and bolster the pound.<\/p>\n
Versus a weakening euro, sterling rose 0.1% at 85.63 pence.<\/p>\n
Data showed on Friday that Britain\u2019s economy shrank 2.9% in January from December, a less severe decline than expected, as the country went back into a coronavirus lockdown. It\u2019s likely to shrink by 4% in the first quarter of 2021, official data showed.<\/p>\n
The better-than-feared data proved \u201cslightly GBP positive,\u201d said ING analysts, adding they expected sterling to continue to trade around 85.50 pence versus the euro.<\/p>\n
Sterling has gained more than 4% against the euro in 2021 and around 2% versus the dollar.<\/p>\n