By Joice Alves
LONDON, Sept 21 (Reuters) – Sterling was beneath strain on Monday as headwinds within the banking sector hit buyers’ danger urge for food, whereas rising COVID-19 instances prompted Britain to think about a second nationwide lockdown.
The pound was down 0.6% towards the greenback at $1.2840 by 0949 GMT GBP=D3, hitting the bottom level in six days.
Versus the euro, sterling was down 0.1% at 0.9178 EURGBP=D3.
A slide within the banking sector set British blue chip firms .FTSE on track for his or her worst day in additional than three months after reviews that some London listed banks have been amongst people who moved allegedly illicit funds over the previous twenty years.
“This kind of retreat to danger sentiment which is being led by the banks is inflicting headwinds for sterling,” stated Jeremy Stretch, head of G10 FX Technique at CIBC Capital Markets.
Analysts prompt the pound has been behaving over the previous months like a “risk currency”, in that it weakens when market sentiment deteriorates.
Stories that British Prime Minister Boris Johnson was pondering a second lockdown additionally contributed to the risk-averse narrative.
New COVID-19 instances have been rising by at the least 6,000 per day in Britain and the testing system was buckling in a rustic that already has the largest official COVID-19 dying toll in Europe at 41,777 individuals.
“We’re in an setting the place the dangers of further lockdowns are constructing and clearly that is creating kind of completely different pressures or difficulties for the restoration story,” Stretch stated.
The prospect of a chaotic finish to the Brexit transition interval in December if Britain fails to agree a commerce cope with the EU additionally continues to hold over sterling.
“Brexit talks will stay the important thing driver this week and we see the complacent GBP nonetheless going through sizeable draw back danger as no-deal is regularly priced again in,” analysts at ING wrote in a word to shoppers.
(Reporting by Joice Alves; Enhancing by Kirsten Donovan, William Maclean)
((Joice.Alves@thomsonreuters.com; +442075422345; Reuters Messaging: email@example.com))
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