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The pound fell again yesterday in its fourth straight day of losses against the euro. The slump is largely due to the prospect of tighter measures being introduced across England to help control a surge in coronavirus cases. From this Thursday, Prime Minister Boris Johnson has ordered pubs, restaurants and bars to close at 10pm every night in a new curfew across England.
Mr Johnson hopes the move will help halt the possibility of a second lockdown which could potentially further cripple the UK economy.
The Prime Minister will be addressing the nation at 8pm this evening to give more details on the measures and what’s to come.
The new measures have had an impact on the exchange rate with the pound currently trading at 1.0889 against the euro, according to Bloomberg at the time of writing.
This is below yesterday’s rate of 1.0912, with sterling now dipping below that 1.09 handle.
Michael Brown, currency expert at Caxton FX, spoke to Express.co.uk regarding the latest exchange rate figures.
He said: “Sterling fell to a four-day low against the common currency yesterday, with the pound facing stiff headwinds from mounting speculation that tighter measures would be brought in to control an apparent rise in coronavirus cases.
“Of course, any tighter measures will have a significant economic impact, potentially derailing the recovery, hence the impact on FX.
“Today, all eyes will be on those measures, with investors still grappling with how they will impact the UK economy, with signs that they could tip the UK into a ‘W-shaped’ double-dip recession likely to be greeted with another round of sterling selling.”
However, new coronavirus restrictions are not the only obstacle standing in sterling’s way.
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George Vessey, UK Currency Strategist at Western Union Business Solutions, said sterling is also becoming “more volatile” following new Brexit developments.
He said: “GBP/USD hangs mid $1.29’s this morning following three unsuccessful breaks above the $1.30 handle last week.
“Continued Brexit hopes support the British pound, however attention turns as UK health authorities mull further lockdown restrictions.
“Chancellor Rishi Sunak may extend business support loans as the existing furlough scheme winds down.
“UK PMIs could be key in an otherwise light calendar week of economic data.
“GBP/USD takes the bids near 1.2955, up 0.33 percent on the day, heading into the London this morning.
“In doing so, the Cable pays a little heed to the coronavirus (COVID-19) threats emanating from the UK.
“Prime Minister Boris Johnson is expected to give Britain one final chance to prove it can follow the rules and suppress a second wave.
“The Prime Minister said he may have to ‘intensify’ measures that could act as a temporary ‘circuit-break’ to stem a resurgence of the virus and prevent Britain being forced into a more aggressive second lockdown.
“As we near the Brexit transition period expiry at year-end, Sterling is becoming more volatile to any new developments.
“Parliament is set to approve the Internal Markets Bill during the week, and markets will focus on the EU’s response.
“If talks collapse, the pound could tumble while attempts to reach a compromise could boost it – either way, expect significant movements in Sterling.”
What does this mean for your holidays and travel money?
The Post Office is currently offering a rate of €1.0518 for more than £400, €1.0671 for over £500 or €1.0725 for over £1,000.
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