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Pound weakens as markets react to Europe’s UK travel bans

football merchandise Pound weakens as markets react to Europe's UK travel bans Football Merchandise
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The pound has fallen further as European countries closed their borders to the UK following the discovery of a new strain of the coronavirus

Sterling dipped by nearly two cents against the US dollar to close to $1.33 in early trading on Monday and was also down by nearly a cent against the euro to just above €1.09.

The UK currency had already been experiencing volatile trading recently with hopes of a Brexit deal driving it to the highest level since 2018 against the US dollar last week.

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Travellers frustrated by new restrictions

But the imposition of tough new restrictions across parts of Britain to curb a worrying upturn in COVID-19 case numbers, and fears about the emergence of a new strain of the virus, spooked neighbouring countries and markets.

Jeffrey Halley, senior market analyst at Oanda, said: “Brexit trade deal talks remain stalled over the weekend, with time running out to approve a deal through by both sides before 31 December.

“Combined with European border closures and the UK health secretary using phrases such as ‘out of control’ to describe the new strain, sterling is, unsurprisingly, under pressure today.”

Prime Minister Boris Johnson is to chair an emergency response meeting on later today to discuss the virus situation, with fears that a French ban on freight from the UK could result in food shortages with just a few days to go before Christmas.

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COVID-19: The economic virus

That, combined with the lack of a Brexit deal, saw futures in UK and European stock markets fall.

Latest worries over the virus overshadowed the emergence of a deal agreed by politicians in the US on a support package worth $900bn (£630bn) to provide more support for American families and businesses hit by the coronavirus crisis.

With tougher COVID-19 restrictions being imposed in Australia, Thailand and Japan, reaction to the US package was subdued across Asian markets.

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