The pound climbed to $2.10 for the first time since 1981 this morning, boosted by speculation that China was preparing to shift its foreign reserves out of dollars.
By 10.30am, one pound was worth $2.1053. The dollar, which has been weakening for several weeks, also hit a new all-time low against the euro of $1.4703.
Analysts said today's falls had been sparked by comments made by Cheng Siwei, vice chairman of China's National People's Congress. He told a Beijing conference on Tuesday that China would "favour stronger currencies over weaker ones, and readjust accordingly". Dollar hits 26-year low against pound (more)
Mark Alexander
