GBP EUR Slumps on Fears of UK Lockdown

GBP EUR Steady as Markets Await German Data

The GBP EUR exchange rate was -0.67% lower on Monday as the UK inched closer to further restrictions. The weekend saw an emergency cabinet meeting and the government’s advisers were calling for imminent restrictions. The pair will have consumer confidence from Germany ahead today.

The GBP EUR started the week at 1.1756 but was trading below 1.1700 on Monday.

Lockdown fears hit the pound but ‘unlikely’ before Christmas

Lockdown fears grew in the UK after PM Boris Johnson called a cabinet meeting with Chris Whitty and Patrick Vallance set to brief ministers.

However, Steve Swinford of the Times said:

“Boris Johnson is unlikely to impose further Covid restrictions before Christmas after delaying a decision today. No announcement is expected today – ministers don’t think the data is there, despite warnings from scientists.”

He said:

“We’re told that the more likely scenario – as disclosed by The Times at the weekend – is a two-week circuit breaker after Christmas. The 28th has been pencilled in by officials as the starting point for the new curbs – again taking into account the 48 hours needed for recall,” he added.

The UK is turning Australian on the new variant with only 12 deaths seen from the current strain, but the government seemed eager for curbs long before that figure.

Prof Carl Heneghan, director of the Centre for Evidence-Based Medicine at the University of Oxford, has been one of the UK scientists most critical about further lockdowns. He told BBC Radio 4:

“If you’re in Greater London now, population in the workplace is down by 40%, public transport down by 40%. In the City of London, it’s up to 60%. So people are able to respond to information or adapt their behaviour accordingly. The question here is when are we going to treat people like adults?”

“We’re in deep, deep trouble here of potentially talking ourselves into annual winter lockdown. Because what happens is this is as good as it gets.”

Europe also faces new restrictions with Ireland adding pub curfew

The pound sterling versus the euro is dropping despite the fact that Europe is also facing lockdowns.

Germany joined France and others restricting travel from the UK with a quarantine of 14 days imposed. Ireland has introduced an eight day curfew for pubs.

Germany is closing nightclubs and indoor venues, while Spain has an emergency meeting on Spain. Italy will meet a day later to discuss new measures.

The latest move to restrictions comes after mass protests across Europe at the weekend. The politicians are playing with fire and could see rising civil unrest in the months ahead with many defying new rules.

A German consumer confidence figure is due out today with a lower reading of -2.7 expected after last month’s -1.6. February saw it as low as -15.5 and it may head back there if restrictions continue.

The UK will also see a consumer confidence reading released on Wednesday.