* Graphic: World FX rates in 2020 tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote tmsnrt.rs/2hwV9Hv (Updates prices, adds detail)
LONDON, Jan 28 (Reuters) - The pound staged a temporary retreat on Thursday as investors tempered some of their optimism about Britain’s vaccine rollout, but a weaker dollar later helped it return above $1.37.
Sterling hit its highest level against the dollar since May 2018 on Wednesday and later reached an eight-month high against the euro, a move analysts attributed to Britain rolling out COVID-19 vaccines faster than continental Europe.
Concern about vaccine rollouts globally, and the impact of mutations of the coronavirus, created a cautious tone in markets, and a stronger dollar, which meant that the British currency eased off these highs on Thursday.
But the dollar weakened at around 1340 GMT, with Wall Street equities rallying, causing cable to head back towards its highs.
At 1626 GMT, the pound was up 0.2% against the dollar, at $1.3724, compared with Wednesday’s $1.3759 high.
Versus the euro, it was up around 0.2% at 88.345 pence, after peaking at 88.135 in the previous session.
“We consider sterling optimism to be excessive and we see the risk of disappointed expectations,” Commerzbank FX strategist You-Na Park-Heger wrote in a note to clients.
“The markets are clearly ignoring that the current infection situation in the UK is still very tense,” she said.
Britain has the world’s fifth highest death toll from COVID-19, and Prime Minister Boris Johnson has indicated that a strict lockdown in England will last until March 8.
British households have cut debit and credit card spending sharply and the proportion of workers on furlough has risen to its highest since July.
Britain said it must get all the COVID-19 vaccines it had ordered and paid for, after some European Union politicians asked drugmaker AstraZeneca to divert doses from the UK to make up for a shortfall in supplies.
Elsewhere, British officials told Reuters that the country will submit a request to join a trans-Pacific trading bloc grouping 11 countries before it has published an assessment of the benefits of membership. (Reporting by Elizabeth Howcroft; Editing by William Maclean, Larry King and Alexander Smith)