The Pound has tumbled this morning after the UK government announced new restrictions to reduce the spread of a new Coronavirus strain.
Following a spate of new cases in London and the South East of England, Boris Johnson announced new Tier 4 restrictions for millions and reversed plans to loosen restrictions over the Christmas period.
Although there is no evidence this mutation is more deadly, or resistant to the new vaccines, governments across Europe are not taking any chances. They have severed transport ties with the UK in a bid to prevent the spread of the new virus strain, which is believed to be 70% more transmissible. Boris Johnson is calling together his Cobra Cabinet for an emergency meeting following rising concerns that British supply chains will be hit hard.
With only ten days to go until the end of the Brexit transition period, negotiators have failed to reach an agreement over the weekend, reaching stalemate over EU demands on fisheries. The UK are insisting the EU needs to budge on their stance, but we have seen no further progress. Having missed another ‘deadline’ set by the European Parliament (Sunday), it appears that talks will go down to wire and this is creating some concern in the market, adding to Sterling woes today. However, a deal still seems the most likely option, with fisheries always expected to be sticking point given political sensitivities.
As a result, the GBP/USD has fallen around 2% from Friday’s high and trades at a one week low. The GBP/EUR has lost around 2-cents from Friday and now trades at a 10-day low.