The British pound has come under heavy selling pressure this week as the country prepares for the start of the new set of COVID-19 restrictions announced by Boris Johnson yesterday. The UK PM has been warned by scientists and health authorities that the UK is on the brink of a second COVID crisis.

The number of new infections in the UK has been dramatically increasing over recent weeks and is now back up to where it was when the first nationwide lockdown was introduced. While the death toll has not increased at the same rate, scientists have warned that if the current trajectory in infection rates continues, the UK death toll from COVID will be back up into the hundreds by November.

In a statement given in the House of Commons yesterday, ahead of the PM’s televised address to the nation, Johnson warned that the UK was at a “perilous turning point”. The PM went on to say: “After six months of restrictions, it would be tempting to hope the threat has faded and seek comfort in the belief that if you have avoided the virus so far then you are somehow immune,” he said.

“That sort of complacency could be our undoing. if we fail to act together now, we not only put others at risk but jeopardise our own futures with the more drastic action that we will inevitably be forced to take.”

What are the new restrictions?

  • The partial return of sports fans to stadiums from October 1st has been postponed.
  • Indoor sports and other activities are prohibited again
  • Wedding celebrations to be limited to 15 guests and funerals to 30 mourners
  • Masks will be mandatory for all retail and hospitality staff as well as passengers on public transport and in taxis.
  • All pubs and restaurants must close by 10pm
  • People to work from home if they can
  • No groups larger than 6 allowed to meet up
  • £200 fine for those caught not wearing masks when in shops/venues or on public transport.

The reaction to Johnson’s measures have been highly divided across the political spectrum. Critics have accused Johnson of dangerous flip-flopping in his handling of the pandemic and have warned that the measures are not severe enough. Meanwhile, Sadiq Khan, Mayor of London, has praised the new restrictions and urges compliance from the public, especially in London, in a bid to avoid the need for a harsher shutdown such as the full scale lockdown seen in March.

Technical Views

FTSE (Bearish below 5922.4)

From a technical viewpoint. The FTSE failed at the test of the channel top and 50dma and dipped briefly below the 5922.4 level before moving back above it today. While above here, further rotation higher could still be seen. Below the level however, attention will turn to the next support at the 5626 level.

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