“We have now shifted into a higher trading range against the dollar after finally breaking above $1.66,” comments Mark O’Sullivan, director of dealing at specialist foreign exchange provider Currencies Direct. “Sterling has been subdued by fears in the banking sector so far this year but these have been quelled by the strong numbers from Barclays and HSBC.

“The pound is rallying on these releases, as confidence returns to the UK banking sector, and more good news is expected from Lloyds and RBS in the week.

“The pound was also boosted by improved second quarter GDP data from the US. This helped comfort the markets, which weakened the dollar, and continued the equities’ bull-run,” continues O’Sullivan. “Sterling is a currency that reacts to hope and fear, and we are certainly in the land of hope and glory today!”

By mid-morning sterling had pushed up to over 1.18 against the euro and just over 1.68 against the US dollar.

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