Pound weakens as markets begin to react to Europe’s UK travel bans

The pound struggled overnight as Asian markets reacted to news that several European countries had closed their borders to the UK.

The European reaction came after a new strain of the coronavirus prompted parts of the UK to return to stricter rules aimed at limiting its spread.

Also reacting to the continuing lack of progress of a post-Brexit trade deal, the pound slid 0.8% to $1.34 and was down about 0.7% against the euro to 91.36p.

Prime Minister Boris Johnson is to chair an emergency response meeting on later today to discuss the virus situation, with fears that a French ban on freight from the UK could result in food shortages with just a few days to go before Christmas.

That, combined with the lack of a Brexit deal, to cut 1% from FTSE futures and 1.5% from EUROSTOXX 50 futures.

In the US, Senate Majority Leader Mitch McConnell said an agreement had been reached on a COVID relief bill worth about $900bn (£634bn).

Rodrigo Catril, National Australia Bank’s senior currency strategist in Sydney, said: “The lockdown news and the stalemate on Brexit is keeping the market nervous.

“Dollar strength is largely being driven by the move lower in the pound.”

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