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New Covid measures hold Sterling back

23 Sep 2020

After the UK introduced new coronavirus restrictions yesterday, the British Pound extended its losses, making it the worst month in four years. 

ING strategists stated, “This is another negative impacting already grim GBP prospects, which however remain primarily driven by developments in EU-UK negotiations - where we have so far seen very little progress.” 

In an address to the public, British Prime Minister Boris Johnson announced that restaurants, bars and other hospitality venues must close by 22:00 and encouraged people to work from home to minimise the spread of the virus. 

Also affected by the Brexit negotiations, the Sterling fell below its 200-day moving average overnight. At the time of writing, the UK currency was being traded at a 2-month low of $1.2695. 

Michael Hewson, chief market analyst at CMC Markets UK said, “The hope is that September will continue to see economic activity remain close to the levels seen in August, where “eat out to help out” helped boost the services numbers significantly.”

He added, “Of course, after the events of yesterday, and the sudden tightening of restrictions, all of this is rather moot, as well as auguring badly for any type of continuity as we look towards Q4, not to mention what it does for consumer confidence.”