UK Reopens Despite Looming Covid Cases, Sterling Drops
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- “Freedom day”, as dubbed by the media, overshadowed by looming Delta cases in the UK
- England reopens today despite registering about 50,000 Covid-19 cases a day, sterling slips
The UK reopens today by removing virtually all lockdown restrictions. This comes as new gives a sharp rise in Covid-19 infections over the last weeks. The decision, which ignited a series of warnings from health experts, will allow shops, bars, restaurants, and sporting events to function at full capacity. Also, face masks will no longer be required.
From Monday, the now-called “Freedom Day”, the UK government would aim to restart an economy heavily battered by some form of a lockdown since the onset of the pandemic in March 2020. Health experts, however, argue that the reopening strategy comes with heightened risks for the population during a time when the Delta variant is sweeping across the country.
Economists worry that the new variant, capable to spread 80% faster than the Alpha strain, could grow to the point where the UK economy could derail from its path of recovery and dip back into a recession.
On the back of the increased economic and health-related risks, Prime Minister Boris Johnson has urged the public to take a cautious approach to the lifting of the restrictions. “If we don’t do it now, we’ve got to ask ourselves, when will we ever do it?” he said in a video message filmed on Sunday. He also explained he had to self-isolate after being in contact with the health secretary Sajid Javid. “This is the right moment but we’ve got to do it cautiously. We’ve got to remember that this virus is sadly still out there.”
Delta Strain Threatens
Confirmed coronavirus cases in the UK have been growing at a rapid pace in recent weeks. Daily case numbers have now surged to about 50,000 a day. In contrast, in the early days of May, Covid-19 infections hovered below 2,000 daily. Daily Covid-19 cases in the UK have climbed to represent the third-highest number in the world, following Indonesia and Brazil.
As a result of the looming fears that the economy and consumer spending could take a hit if cases spiral out of control, the British pound has been in a downturn for the last couple of weeks. Moreover, since early June, the sterling has been depreciating against the US dollar.
British Currency Continues Its Descent
In the early hours of Monday’s market session, the British currency has continued its descend against the greenback. The pound reached a session low against the dollar at 1.3747, down about 0.25% on the day. The pound has been declining across the board as traders and investors are offloading their sterling holdings in case the UK economy takes another blow by the coronavirus crisis.
The sterling is now close to a four-month low against the US dollar as it trades to the downside for a third straight day. The euro is also making a move higher against a weaker pound. The EUR/GBP exchange rate is advancing for four consecutive days. This followed after it found enough buyers to turn the trend last week when the euro slipped to a four-month low against the UK currency.