New Covid strain worries investors
US congressional leaders have confirmed that a new stimulus package, worth roughly $900 billion has now been agreed. The bill includes additional unemployment benefits, stimulus cheques and support for several hard hit industries. This is the second largest US economic relief in US history, after the first stimulus package in March. Final votes are on the bill set to take place today. US businesses and citizens have had no monetary aid from the government since the first stimulus package so news of a new package was well received.
A new COVID-19 strain, found in parts of UK dominated news headlines over the weekend. This new strain, was found to be spreading at a faster rate than the original and prompted the government to enforce new rules for parts of the country. Boris Johnson announced a new Tier 4 level of restrictions across the southeast of England, including all of London, this weekend. Reports suggest these new restrictions could remain in place until Easter should case numbers continue to rise. In response to the news, a collection of countries including Germany, France and Canada have halted all flights and travel from the UK to stop the spread. This no doubt will put further pressure on sterling as we approach the end of year. Johnson also confirmed changes to the current Christmas plans. In Tier 4, no household are allowed to meet, and pubs, restaurants and gyms must all close. For the rest of the country, now, up to 3 households can meet for Christmas day only rather that the 5 day period that was originally stated.
In Brexit news, talks still remained blocked over fishing rights as no real progress was made over the weekend. Talks are set to continue today however EU officials confirmed that a deal cannot be agreed this side of the new year. UK cabinet minister Gove, suggested that the UK and EU can agree on a series of ‘mini deals’ to ease any disturbance to trade in January if a no deal is agreed before the end of the transition period.
With all this in mind, sterling is down across the board, this morning. GBP/EUR is trading below 1.09 and GBP/USD is trading below 1.33.
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