The Pound of UK currency falls by 1.2%. This is amid renewed concern about Covid-19 cases in the UK and another EU that missed the deadline. The US dollar was buoyed after a $900bn plan to help its economy weather the coronavirus pandemic was agreed on.
Post-Brexit trade talks are set to continue on Monday between negotiators. The UK and EU are trying to reach a trade deal before the Brexit transition period ends on 31 December.
The stalled negotiations have been partly responsible for the pound fluctuating over recent weeks. This is with the currency falling as low as $1.32.
A four-day winning streak pushed it back up to just under $1.36, before it reversed course again.
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captionBarnier: Negotiations have “just a few hours”
Lockdown results in the Pound fall.
European nations have begun to impose travel bans on the UK. This is because it reported a more-infectious and “out of control” coronavirus variant over the weekend.
Ireland, Germany, France, Italy, the Netherlands and Belgium are all halting flights.
On Saturday, UK Prime Minister Boris Johnson did an introduction of a new tier four level of restrictions. The restrictions will be for London and South East England.
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The lockdown news and the stalemate on Brexit is keeping the market nervous. The National Australia Bank’s senior Rodrigo Catril told Reuters in covid rules meeting.
The Pound Falls. Previous sticking points
One major sticking point is access to the UK’s water for fishing. With the look fishing industry accounts for just 0.1% of gross domestic product, (GDP) it is of high political significance.
If a trade agreement will not reach by the end of the month, British firms will revert to trading. This will work with the EU under rules established by the World Trade Organization (WTO).
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This will mean imports and exports to the EU would be subject to WTO-negotiated tariffs, essentially a tax on goods.
This falling of pound may result to decline in country’s profits. It will also affect the businesses which can lead to closure due to exchange in currency. On the other hand it will lead to poverty bringing together the combination of Covid errors to the economy.
Currency experts have warned that the pound could fall to $1.25 by the middle of next year. This will be if there will be no trade agreement.