LONDON (Reuters) - Foreign investors cut their holdings of British government debt by the most in nearly four years in January, a move analysts said reflected sterling’s recovery and bets on higher interest rates, not Brexit jitters.

Foreign holdings of British government bonds fell by 9.252 billion pounds ($12.7 billion) in January, the biggest net monthly sale since March 2014 and the fourth-largest since records began in 1963, the Bank of England said on Thursday.

Sterling tumbled after the vote to leave the European Union in June 2016 and the BoE has pointed out how shares in companies reliant on the UK market have underperformed since then.

However, January’s sale of gilts by foreign investors was probably due largely to a strengthening of sterling against the U.S. dollar in the previous months, RBC fixed income strategist Vatsala Datta said.

Bond investors often try to keep a fixed ratio of bonds from different countries, so if a currency appreciates a fund becomes overweight in that country’s bonds, requiring sales to bring holdings back into balance.

“January is seasonally a big month for rebalancing flows... part of the reason is the strength of the currency,” Datta said.

Higher expectations that the BoE will follow up November’s rate rise with one or two more hikes this year also dented the appeal of UK fixed-income assets. However, with U.S. interest rates expected to rise this year too, the impact was somewhat limited, Datta said.

Two-year British government bond yields GB2YT=TWEB hit their highest level since the day after the Brexit vote in January. On Wednesday they reached the highest since July 2011 at 1.041 percent.

Two-year Treasury yields US2YT=TWEB are the highest since September 2008.

Marc Ostwald of ADM Investor Services said rising yields and market volatility were the main factor behind January’s gilt sales. Japanese investors were big sellers, he said, based in part on his reading of Japan’s monthly currency reserves data.

“The Japanese were big buyers last year because of carry attractions. Then you had a bout of currency volatility and the hedges haven’t worked out too well, so they’ve been taking the money back,” he said.

($1 = 0.7281 pounds)