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UK Health Secretary Matt Hancock has confirmed that more areas in the UK will be moved into the highest tier of economic restrictions, Tier 4, reported Reuters. UK press had speculated throughout the week that such a move was likely, with UK Covid-19 cases surging above 50K for the first time on Tuesday. Many analysts expect an eventual return to a March-style lockdown (which same are calling Tier 5). 

The Midlands, North East and parts of the North West and South West will be moved to Tier 4 and almost all remaining areas moved into Tier 3. The spread of the new, more virulent strain of Covid-19 is increasing in the South West, Midland and parts of the North, Hancock said. The new restrictions will be in force from 00:01GMT on Thursday. 

Meanwhile, UK PM Boris Johnson said that the new variant is making it more difficult to keep kids in schools and the government is going to have to look hard at what happens with schools. Analysts note that school closures are particularly economically damaging as they remove a crucial form of childcare from working parents.  

Market reaction

GBP has taken the news in its stride, with GBP/USD still close to highs of the day around 1.3600 and EUR/GBP still close to lows of the day beneath 90.50. The news was very much expected at this point. GBP seems to be more focused on the Brexit deal’s progression through parliament (no hiccups so far and the bill is likely to be signed into law by the end of the day) and the fact that the AstraZeneca/Oxford University vaccine has just been approved, which will help accelerate the UK’s vaccination programme.