By Yasin Ebrahim
Investing.com – The pound fell sharply against the dollar Monday after the U.K. Prime Minister Boris Johnson imposed a third national lockdown for England to curb rising infections that threaten to overrun hospitals across the country.
GBP/USD fell 0.8% to $1.3556.
From midnight Monday, England will head into nationwide lockdown, with schools set to close and non-essential workers ordered to stay at home, Johnson said after heeding a warning that health services could be overwhelmed in just 21 days without further restrictions.
The new coronavirus strain, forecast to be between 50% and 70% more infectious than the original strain, is starting to take its toll on the health services as infections rose by a record 58,784 on Monday from 55,157 a day earlier. That was the seventh-straight day of more than 50,000 confirmed coronavirus cases.
The move marked a blow to expectations that restrictions could be lifted by Easter, with experts predicting a further delay would slow the economic recovery, and prompt the Bank of England to ease monetary policy.
"(A) further imminent tightening and extension of English containment measures … increased risks of a contraction in U.K. GDP in Q1 and an easing of monetary policy in due course," Daiwa Capital Markets said.
The further restrictions to curb the spread of the virus comes just as the government rolled out the AstraZeneca-Oxford University vaccine.
Ahead of this decision, the prime minister had faced calls from opposition leaders to impose a new national lockdown to allow vaccines to be delivered.