The British Pound Stumbles as New Restrictions Loom

Plus500 | Tuesday 22 September 2020

Markets were shaken as the British Pound Sterling (GBP/USD) dropped against the USD this week and a new round of Coronavirus restrictions are set to go into effect across the UK.

In an effort to clamp down on surging Coronavirus cases, which are approaching 400,000 total cases across the UK, the UK’s Cabinet Office Minister, Michael Gove hinted at a new wave of measures to be implemented in an effort to preserve public health. In addition, Gove made a public request for all workers who are able to work from home to prepare to do so.

The first of these new measures, requiring hospitality venues to close doors at 10PM, are scheduled to go into effect on Thursday night. While venues and pubs will be allowed to operate during the day, it is a blow of uncertainty during a month that has put the UK’s economy in the global spotlight following floundering Brexit talks.

GBP

GBP Weakens

While British Prime Minister Boris Johnson is planning to address the nation in the coming days with wider restrictions, traders seem to be bracing for difficult times ahead.

After lockdowns earlier this year, the looming threat of a “no-deal” Brexit, and a potential second wave of lockdowns, the British Pound is continuing a volatile year by settling around 1.28USD. This is lower than its bottom during the 2008/2009 global recession when it hit 1.4 against the dollar in March 2009. 

Markets react

Adding to an already rocky September, global markets reacted to the falling British pound, the country’s growing Coronavirus cases, and other factors, by continuing to slide.

UK markets wiped away £50 billion with the biggest losers remaining in the travel and hospitality sectors. For example, the LSE’s FTSE100 (UK100) lost 3.4% and IAG (IAG) shed 12% yesterday.

London’s market is not alone in this bearish September. 


Get more from Plus500

Expand Your Knowledge

Videos & Articles help you expand your trading knowledge.

Prepare Your Trades

Our Economic calendar helps you explore global market events.

Trade Without Surprises

Understand the full costs of your trades now for better expense management later.


This information is written by Plus500 Ltd. The information is provided for general purposes only, and does not take into account any personal circumstances or objectives. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. No representation or warranty is given as to the accuracy or completeness of this information. It does not constitute financial, investment or other advice on which you can rely. Any references to past performance, historical returns, future projections, and statistical forecasts are no guarantee of future returns or future performance. Plus500 will not be held responsible for any use that may be made of this information and for any consequences that may result from such use. Hence, any person acting based on this information does so at their own discretion. The information has not been prepared in accordance with legal requirements designed to promote the independence of investment research.

Need Help?
24/7 Support