The pound held steady against the dollar and the euro (GBPEUR=X) on Tuesday as England entered its third national lockdown.
Sterling was down against the euro for most of the day but pulled back to trade flat at €1.1082 as markets in Europe came to a close. It ended 0.33% higher against the dollar at $1.3621.
On Monday night, in a televised address to the nation, UK prime minister Boris Johnson announced new lockdown restrictions across England and Wales that will last until at least the middle of February.
People have been told to stay at home and non-essential retailers are to stay closed. Primary and secondary schools across the country have been shut amid warnings that the health service could be overwhelmed without tougher restrictions. Scotland, Wales and Northern Ireland have introduced similar measures.
Economists believe the restrictions are almost certain to lead to a steep double-dip slump for the UK economy.
The pound was little-changed by news of a £4bn ($5.4bn) support package for retail, hospitality and leisure firms, announced on Tuesday. Firms forced to close can apply for one-off grants worth up to £9,000 per site. The package is expected to support more than 600,000 firms.
Other companies hit by the shutdown will be able to apply for funding from local authorities, with almost £600m available for the rest of the economy.
“For the short term our guidance is to expect most of GBP/USD’s moves to be driven by the USD leg, with EUR/GBP likely to remain range-bound until the COVID-19 landscape becomes clearer in the next few weeks, as the distribution of the vaccine accelerates,” said Jordan Rochester, a currency analyst at Nomura.
Watch: Boris Johnson announces new national lockdown for England