Pound Falls As Lockdown, Georgia Runoffs Hurt Risk Sentiment
The pound weakened against its major counterparts in the European session on Tuesday, as a continued surge in coronavirus cases in several parts of the world and the imposition of further restrictions raised concerns about global economic recovery.
British Prime Minister Boris Johnson on Monday announced a new national lockdown in England to contain a new variant of Covid-19.
The restrictions include the closure of schools and colleges and the requirement to stay at home except for essential purposes.
Germany is likely to extend a national lockdown until the end of the month. The current restrictions will expire on January 10.
Investors focus on the Senate runoff elections in Georgia that will determine control of the chamber.
The races are between Republican Sen. David Perdue and Democrat Jon Ossoff, as well as Republican Sen. Kelly Loeffler and Democrat Rev. Raphael Warnock.
The opinion polls show a narrow race and the outcome could have a major impact on incoming U.S. President Joe Biden’s economic policies.
The pound depreciated to 6-day lows of 0.9054 against the euro and 1.1921 against the franc, down from its early highs of 0.9015 and 1.1982, respectively. Next key support for the pound is possibly seen around 0.92 against the euro and 1.16 against the franc.
After a rise to 140.15 at 10:00 pm ET, the pound slid to a 1-week low of 139.51 against the yen. The pound is likely to challenge support around the 135.00 region, if it drops again.
The pound reached as low as 1.3554 against the greenback, after climbing to 1.3613 at 1:45 am ET. Should the pound falls further, 1.31 is likely seen as its next possible support level.
Looking ahead, Canada industrial product price index for November and U.S. ISM manufacturing index for December are due in the New York session.