By Samuel Indyk
Investing.com – GBP/USD dropped to a session low after reports suggested the UK government is close to agreeing on new restrictions to slow the spread of coronavirus.
The Times’ Tom Newton-Dunn tweeted of an imminent “Quad meeting” to discuss implementing what the government has previously referred to as “Plan B”. The measures could come into force as early as Thursday.
The restrictions could include advice to work from home and the introduction of COVID passports for indoor and outdoor events.
Dunn reported that it's 85% likely that the measures will be introduced, citing a source.
There is no suggestion that the UK government plans to enforce a stricter lockdown with the closure of hospitality and banning attendees from small or large-scale events.
The BBC reported that a Cabinet meeting is scheduled to take place at 15:45GMT with a press conference after at 17:30GMT.
GBP weakens
GBP/USD weakened following the reports, dropping below the previous 2021 low of 1.3195 to 1.3186.
The pound now trades at its lowest level since December when there was heightened uncertainty surrounding a potential Brexit deal and it seemed as though the UK could crash out of the European Union without a trade deal.
GBP also weakened against the EUR as EUR/GBP moved back above 0.8550.
The prospect of an interest rate hike by the Bank of England at next week's meeting now also seems less likely. Traders are pricing in just a 45% chance of a 15 basis point hike next week, down from 57% earlier on Wednesday, according to Reuters.