By Yasin Ebrahim
Investing.com – The pound fell sharply against the dollar Monday after the U.K. Prime Minister Boris Johnson imposed a third national lockdown for England until mid-February to curb rising infections that threaten to overrun hospitals across the country.
GBP/USD fell 0.8% to $1.3556.
From midnight Monday, England will head into a third nationwide lockdown, with most schools and non-essential retailers are set to close, Johnson said after heeding a warning that health services could be overwhelmed in just 21 days without further restrictions.
"We must go into a lockdown which is tough enough to contain the new [coronavirus] variant," Johnson said.
The new coronavirus strain, forecast to be between 50% and 70% more infectious than the original strain, is starting to take its toll on the health services as infections rose by a record 58,784 on Monday from 55,157 a day earlier. That was the seventh-straight day of more than 50,000 confirmed coronavirus cases.
The move marked a blow to expectations that restrictions could be lifted by Easter, with experts predicting a further delay would slow the economic recovery, and prompt the Bank of England to ease monetary policy.
"(A) further imminent tightening and extension of English containment measures … [increases] risks of a contraction in U.K. GDP in Q1 and an easing of monetary policy in due course," Daiwa Capital Markets said.
Unlike the previous lockdown in the spring, the UK will be "rolling out the biggest vaccination programme in its history," the prime minister said. "By the middle February... we expect to offer first vaccine dose to everyone to top priority groups [including residents in care homes and their carers, for older adults over 70 and the vulnerablable]," he added.
The AstraZeneca-Oxford University vaccine distribution program got underway on Monday. The prime minister warned that while the vaccine would eventually lead to the lifting of many restrictions, there would be a time lag before the pressure alleviated on the National Health Service.
Ahead of this decision, the prime minister had faced calls from opposition leaders to impose a new national lockdown to allow vaccines to be delivered.