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Pound dips as UK lockdown could last into summer

Tom Belger
·Finance and policy reporter
·2-min read
An empty arcade of shops in the City of London. With large numbers of companies continuing to allow their staff to work from home, usually busy business districts are still quiet, and local shops and services are suffering as a result. Picture date: Wednesday August 5, 2020. Photo credit should read: Matt Crossick/Empics
Shops in central London. Photo: Matt Crossick/Empics

The pound dipped on Friday as the UK braced for a prolonged lockdown and new data underlined the toll of curbs on the economy.

A string of comments by ministers in the past 24 hours have dashed hopes Britain could bring down coronavirus infection rates and roll out vaccines fast enough to ease restrictions from March.

Sterling was trading 0.5% lower against the dollar (GBPUSD=X) at $1.366 and 0.4% lower against the euro at €1.124 on Friday morning local time.

It also came as new figures showed British retailers had little to be thankful for over Christmas. Sales barely inched higher in the crucial December trading period, despite only regional rather than nationwide lockdown restrictions and expectations of stronger festive demand.

Official data published on Friday showed sales, excluding fuel, grew by just 0.4% in December. Economists had forecast month-on-month growth of 0.8%.

READ MORE: Christmas did little to boost retail in the UK

Meanwhile separate figures showed the UK government borrowed another £34bn ($46.5bn) in December as the pandemic and lockdown measures continued to push up spending and hit tax receipts. It is the highest tally for that month since records began in 1993.

The chances of lockdowns persisting into the summer appear to be growing, with a change in tone in government statements in recent days.

The pound dipped versus the euro on Friday. Chart: Yahoo Finance UK.
The pound dipped versus the euro on Friday. Chart: Yahoo Finance UK.

Ministers had previously raised hopes the UK could begin easing its lockdown restrictions as vaccine rollouts progress in February or March.

But prime minister Boris Johnson declined to rule out the nationwide lockdown lasting into the summer on Thursday. He said it was “too early to say” when curbs would be eased, warning over the contagiousness of a new coronavirus variant.

WATCH: What is being suggested to help curb the spread of coronavirus?

READ MORE: UK borrows another £34bn as chancellor repeats pledge to get finances on a ‘sustainable footing’

Home secretary Priti Patel also then said at a Downing Street press conference it was “far too early” to speculate when asked if people could book foreign holidays this summer. She reiterated the need to curb current non-essential travel.

Environment secretary George Eustice also declined to highlight any potential re-opening from March or even the summer on Friday morning. “The lockdown will end once we have made further progress on rolling out the vaccines.”

Almost five million people have now been vaccinated. The impact of vaccination of only part of the population on transmission rates remains unclear, however.

Some leading scientists have called for bars and restaurants to be shut until May, and warned easing restrictions only when all over-50s have been vaccinated remains too dangerous.

WATCH: Why can't governments just print more money?