Sterling hit by fresh UK lockdown fears
Sterling weakened against the dollar this afternoon as fears of even tighter lockdown restrictions outweighed optimism surrounding a Brexit deal.
Sterling had rallied after the last minute Brexit deal brought an end to the uncertainty surrounding Britain’s exit from the EU.
But with Brexit finally over traders have turned their attention to the coronavirus pandemic once more. The Prime Minister is expected to announce a new wave of tighter restrictions in a televised address this evening, amid a worrying surge in cases.
Cable sank 0.7 per cent, reversing a substantial chunk of its growth last month, while the pound against the euro sank 1.1 per cent to 90.365 pence.
“The poor pound was the one bearing the brunt of the negative reaction to the [lockdown] news, ensuring the FTSE could continue to gallivant about,” Connor Cambell, Spreadex analyst said.
The FTSE 100 outperformed its European peers in its first day of trading outside the EU, closing 1.72 per cent higher. Sterling’s move lower helped stocks heavily reliant on foreign revenue streams such as mining stocks and consumer goods firms Unilever and Diageo.
“Whether the FTSE can remain so blasé tomorrow will be dictated by the exact scope and severity of what the Prime Minister reveals tonight,” said Campbell.
Companies are bracing for more restrictions as Scotland’s First Minister Nicola Sturgeon announced stricter lockdown rules, reminiscent of last March’s lockdown.
Domestic transport stocks suffered in trading today with National Express, Firstgroup and Go-Ahead Group all closing down over five per cent.