STERLING has scaled new four and a half year peaks on the foreign exchange markets, pushing the pound down to 95.22p sterling. Sterling broke through key market resistance at 2.80 deutschmarks yesterday, helped by strength in the dollar.

Sterling's strong performance this week, after a rally of nearly 2 per cent against the deutschmark, saw it reach a fresh peak of 2.8034 deutschmarks - its highest level since September, 1992, when it was ejected from Europe's exchange rate mechanism (ERM). This pushed the pound down closer to 95p sterling.

It also led to the Irish currency rising to 2.6684 deutschmarks from 2.6618 the previous evening, with the German currency continuing to weaken on confidence that European monetary union would proceed on schedule.

The pound now stands 11 per cent above the weakest currency in the ERM which is the French franc. The Central Bank will be hoping that sterling does not rise too much further, as previous bouts of sterling strength have pulled the pound uncomfortably close to its 15 per cent ERM ceiling.

Revived optimism that European economic and monetary Union (EMU) will get off the ground as scheduled in 1999 has prompted some deutschmark jitters, driving the German currency to fresh 45 month lows against the French franc overnight and new lows against the Spanish peseta and Portuguese escudo, analysts said.

European Union Monetary Affairs Commissioner Mr Yves Thibault de Silguy yesterday said he expected economic and monetary union to start on schedule.

"It is clear that EMU will become reality starting January 1st, 1999, and that a significant number of countries will join then," he said. "There is no turning back."