The pound weakened further against the euro and the dollar yesterday, experiencing its largest one-day drop against the euro since March, amid fears over the new strain of Covid-19 and a missed Brexit deadline.
However, sterling has made a recovery this morning on expectations that a Brexit trade deal can still be achieved. Despite nearing compromise on fishing rights, Sunday’s major Brexit deadline was missed, and negotiations continued into Monday and today. UK Health Secretary Matt Hancock said that talks were disrupted due to the EU putting in “unreasonable demands” on fisheries, but he remains hopeful that an agreement can be reached before Christmas.
More than 30 countries have now banned UK arrivals to try and reduce the transmission of the new strain of Covid-19, resulting in supply chain problems for the UK. US investors have followed European markets by responding to concerns over the new strain. Boris Johnson chaired a cobra meeting yesterday to address the “the steady flow of freight into and out of the UK”, and the EU held a similar crisis meeting to coordinate its response.
Following the meeting, the Prime Minister said that after a call with President Macron, they “both understand each other’s positions and want to resolve these problems as fast as possible.” He also reassured the public that these delays only apply to a very small amount of food entering the UK.
