UK Health Secretary Matt Hancock has confirmed that more areas in the UK will move to the highest level of economic restrictions, Level 4, Reuters reported. The UK press had speculated throughout the week that such a move was likely, with UK Covid-19 cases exceeding 50K for the first time on Tuesday. Many analysts expect an eventual return to a March-style lockdown (which they also call Tier 5).
The Midlands, Northeast, and parts of the Northwest and Southwest will move to Level 4 and almost all remaining areas will move to Level 3. The spread of the most virulent new strain of Covid-19 is increasing in the Southwest. Midland and parts of the north, Hancock said. The new restrictions will take effect from 00:01 GMT on Thursday.
Meanwhile, British Prime Minister Boris Johnson said the new variant makes it more difficult to keep children in schools and that the government will have to take a hard look at what happens to schools. Analysts note that school closures are particularly bad for the economy as they remove a crucial form of child care from working parents.
Market reaction
GBP has taken the news in stride, with GBP / USD still close to the day’s highs around 1.3600 and EUR / GBP still close to the day’s lows below 90.50. The news was highly anticipated at this time. The GBP appears to be more focused on the progression of the Brexit deal in parliament (no setbacks so far and the bill is likely to be signed by the end of the day) and the fact that the AstraZeneca / Oxford University vaccine ends to be approved. which will help speed up the UK vaccination program.
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