-
Sterling slumped against the dollar and euro on Monday after the British government announced new restrictions to curb a fast-spreading strain of the coronavirus and France, Germany and others cut transport ties with Britain.
The pound fell nearly 2% against the dollar to below $1.33 and 1% against the euro, deepening losses seen overnight in Asian trading hours.
Italy, the Netherlands, Belgium, Israel and Canada have also shut off travel ties including suspending flights with the UK, after prime minister Boris Johnson said on Saturday that the new strain had led to a spike in infection numbers.
The government has tightened its COVID-19 restrictions for London and nearby areas, and also reversed plans to ease restrictions over the Christmas period.
The fresh virus controls came as trade talks between Britain and the EU over a Brexit trade deal were expected to continue on Monday, with just days to go until a transition period expires at the end of the year.
“The new tougher (COVID-19) restrictions will likely have to remain in place until there has been greater vaccine roll out which could take months,” analysts at MUFG said in a note.
“At the current juncture, we are working on the assumption that vaccines will still prove effective against the new strain but it is not yet clear. As a result, the economic slowdown will prove deeper and extend further into next year.”
– Reuters