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Confirming speculation from market commentators and analysts in recent days, as well as rumours that the government had been mulling the idea on Tuesday, the Telegraph reported that “swathes” of areas in the UK face being put in Tier 4 Covid-19 restrictions from Boxing Day. 

The announcement is likely to come on Wednesday following a meeting of the Covid-O operations committee and government sources have warned of the rising risk of a full national lockdown in the new year. 

The UK is currently grappling with the rapid spread of a more transmissible variant of the Covid-19 virus that has prompted country’s to ban incoming travel from the UK in a bid to prevent the new variant from spreading globally. Covid-19 deaths rose to 691, the highest since May, on Tuesday, whilst new positive cases being reported hit a record high 36.8K. 

Market Reaction

GBP/USD continues to consolidate around the 1.3350 level, with markets much more focused for now on Brexit updates. News that the UK is likely headed for another harsh national lockdown in the new year is unlikely to help GBP much, however. When European traders return to their desk from 06:00GMT, it will be interesting how they react to the news.