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By Olga Cotaga
3 Min Read
LONDON (Reuters) – Sterling slid on Monday as Britain’s death toll from the novel coronavirus increased and officials said it was too soon to talk about easing the lockdown.
Britain reported 596 deaths from COVID-19, the respiratory disease caused by the virus, in hospitals in its daily update on Sunday, raising the country’s total to more than 16,000.
While that marked the smallest daily rise in almost two weeks, figures published over weekends have usually shown smaller-than-average increases in the death toll, and these daily figures do not include deaths in the wider community.
Sterling fell 0.2% against the dollar to $1.2481. It was also 0.3% weaker against the euro at 87.20 pence – though a “soft euro environment could see euro/sterling drift to 0.8620/50”, said Petr Krpata, chief EMEA FX and IR strategist at ING.
Speculators slightly cut their net long positions on the currency in the week to April 14, CFTC data shows.
“We’re still broadly constructive on the outlook for the pound, but I would expect that the easy money has already been made and it’s going to be much harder for sterling to pick up momentum at least in the short term,” said Dean Turner, an economist at UBS Wealth Management.
He said Britain had started its lockdown after a number of European countries, so would likely start easing its lockdown slightly later than them.
“Sterling is still a very very cheap currency … so as we start to get to that normalisation phase … by the fourth quarter of this year, that should open the door for sterling to pick up some of its recent weakness,” he added.
The pandemic has frozen economic activity in Britain, as in most other developed countries, prompting economists to forecast a deep recession.
The number of people in Britain leaving their homes to go shopping has slumped by 83% since the government closed non-essential retail outlets last month to slow the spread of COVID-19, the British Retail Consortium trade body said on Monday.
Separately, property website Rightmove said it was unable to provide meaningful house price data due to a collapse in the number of new homes being listed for sale.
The British government, in tandem with the Bank of England, had launched several stimulus packages to support the economy.
Finance minister Rishi Sunak launched a new scheme on Monday to protect fast-growing and innovative companies from the economic fallout caused by the coronavirus pandemic.
Still, BoE Deputy Governor Ben Broadbent said on Monday that Britain’s economy might be slow to recover once the government relaxes its coronavirus lockdown.
Broadbent said a 35% contraction in the economy in the second quarter, included in a scenario from the country’s budget forecasters, did not look unrealistic, echoing comments by BoE Governor Andrew Bailey last week.
Reporting by Olga Cotaga; Editing by Alex Richardson, Mark Heinrich and Andrew Heavens
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