GBP/USD stabilises above lows as PM Johnson confirms England lockdown

• GBP/USD saw little reaction when the UK PM confirmed earlier government leaks that England will enter a stricter lockdown.
• Prices are currently consolidating just above the 1.3550 mark after a day of steep losses.

GBP/USD has flatlined just above lows of the day just under 1.3550 set midway through US trading hours. The pair trades with losses on the day of around 0.6% or 80 pips heading into the first FX close of the year, having slipped from earlier highs above the 1.3700 level set during the European morning session. The move lower has coincided with a broader recovery from multi-year lows in the US dollar, though GBP (for the reasons discussed below) is the underperforming G10 currency on the day.

UK PM Boris Johnson confirms England lockdown

GBP sold off on Monday in anticipation (and amid leaks suggesting that) UK PM Boris Johnson would announce a stricter national lockdown in England to tackle the alarming rate at which the virus continues to spread in the country.

In terms of the latest Covid-19 numbers; nearly 60K new cases were recorded in the UK on Monday, a new pandemic record, while the daily admission of Covid-19 patients to hospitals in England surpassed the peak recorded back in April and hit 3145. Deaths came in at just over 400, but many expect this number to rise back above 1000 per day.

PM Johnson announced in a televised address that given the dire state of the situation, which is being worsened by the spread of the much more transmissible new variant of Covid-19 in the UK, England would have to take tougher measures to reduce transmission of the virus, following in the footsteps of Scotland earlier in the day. A stricter lockdown was announced, as expected, that will involve the closure of schools and a ban on outdoor team sports until at least mid-February, starting on Tuesday.

In wake of the confirmation of the third national lockdown in England, the PM is reportedly facing increased calls for further support for businesses, reported the FT.

Separately, an FT report suggested that “red tape” and “a lack of back-up stocks” are affecting the rollout of the UK’s Covid-19 vaccination programme. The report comes after similar fears were aired over the weekend about potential vaccine shortages.

Note that the AstraZeneca/Oxford University vaccine, which was approved last week, is now being rolled out and the pharmaceutical giant is expected to be providing the UK with 2mln doses per week by the middle of January. According to the PM in his statement to the nation on Monday, all members of the nation’s most at-risk category could have received at least one shot of the Pfizer or AstraZeneca/Oxford University vaccine by mid-February.