Yesterday, England’s Prime Minister Boris Johnson announced that the country will enter a second national lockdown starting Thursday. Said lockdown is stated to last at least 4 weeks with restrictions easing only after the beginning of December with hopes that it will not continue through Christmas and the New Year.
Subsequently, today the British Pound Sterling dropped to the weakest levels seen in over a month as the country braces for another blow to its economy in less than a year, following similar measures to curb the onslaught of the COVID-19 pandemic. According to Bloomberg Markets News, the Sterling fell as much as 0.7%. Experts believe that the lockdown will continue to force the economy to constrict, the country will increase its asset purchase target by more than 100 billion pounds than previously expected, and that the Bank of England to institute a more aggressive stimulus package, all of which will negatively affect the status of the pound. Other factors will likely have an impact on the pound this week as well. Uncertainty surrounding the outcome of the United States presidential elections tomorrow has driven the costs of hedging the pound to its highest levels since April. Opposingly, hopes of a Brexit trade agreement in the works, as well as a potential Biden and Blue Wave win of the elections, seem to maintain a sense of security that the pound will not sink lower.