Markets

Sterling extends losses after new Covid-19 restrictions

UK currency having worst month in four years

The possibility of a no-deal Brexit is also weighing on the pound, although Britain has said it believes a trade deal is still possible. Photograph: iStock

Wed Sep 23 2020 - 11:06

Sterling is having its worst month in four years and extended its fall against the dollar and euro on Wednesday after new long-lasting coronavirus restrictions in Britain were announced.

UK prime minister Boris Johnson ordered restaurants and bars to close early and told British people to work from home where possible, in new measures which he said could last for six months.

Sterling fell on the news, dipping below its 200-day moving average overnight, with losses compounded by a bounceback in the dollar.

“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,” ING strategists wrote in a note to clients.

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No deal

The possibility of a no-deal Brexit is also weighing on the pound, although Britain has said it believes a trade deal is still possible.

Mr Johnson is close to getting parliamentary approval for his Internal Market Bill, which angers the European Union by breaking the Withdrawal Agreement struck in January.

In early trade, sterling was at a two-month low of $1.2695, down 0.3 per cent since New York’s close. It has lost 5 per cent so far in September, making this the pound’s worst month since 2016.

Versus the euro, it was down around 0.2 per cent, at 92.12 pence per euro, in its fifth consecutive day of losses. – Reuters

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