Britain: Sterling falls to new low for 2021 amid reports of tighter restrictions

The British pound fell to a new low for 2021 against the US dollar on Wednesday, as expectations that the Bank of England will raise interest rates next week fell amid reports that tougher restrictions against the coronavirus are imminent, Reuters reported.

Britain may impose tougher measures on the coronavirus, including the teleworking recommendation, as early as tomorrow, in a bid to slow the spread of the Omicron mutation, according to British media.

Markets now have a 46% chance of raising interest rates by 15 basis points next week, up from 58% before the announcements and from almost 70% two weeks ago.

The Bank of England may postpone again next week the possibility of becoming the first major central bank in the world to raise interest rates from the low levels of the pandemic due to the spread of the Omicron mutation.

“Imposing these restrictions – which we consider to be only a relatively small tightening of the measures – is probably enough to make the BoE postpone raising interest rates until next week, as it will prefer to wait until the February meeting.” said Scotiabank strategic analysts.

Against the dollar, the pound fell 0.5% to its lowest level since December 2020 at $ 1.3162. Against the euro, the pound weakened by 0.7% to 85.34 pence.

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