Coronavirus: Pound falls as UK government unveils lockdown exit strategy details

Lianna Brinded
Head of Yahoo Finance UK
n this handout image provided by No 10 Downing Street, Britain's Prime Minister Boris Johnson records a televised message to the nation released on May 10, 2020. Photo by No 10 Downing Street via Getty Images

The pound against the US dollar (GBPUSD=X) traded lower on Monday after the UK government unveiled the details of its tentative exit strategy for lifting the lockdown.

Sterling was down 0.7% against the dollar, hovering just above the $1.23 mark as the prime minister Boris Johnson’s lockdown lift stated that social distancing measures will be in place for a quite some time and that if those can work from home should expect to WFH for the “foreseeable future.”

Chart: Yahoo Finance

According to the Department of Health on Monday, the number of people who have died after testing positive for coronavirus in the UK has increased by 210, bringing the total to 32,065. This is the second worst death toll total in the world, only behind the US.

As of 9am local time, a total of 223,060 people have tested positive for the virus in the UK — an increase of 3,877 from the day before.

READ MORE: Coronavirus: UK government unveils roadmap for lifting lockdown for businesses

Johnson reemphasised at the press conference the government’s change in slogan to “stay alert” instead of “stay home.”

He said that throughout the period of the lockdown, Britain has been in level four, out of five, of the government’s COVID-19 alert levels and now the UK is in the position to take careful steps to go to level three:

Table: UK government

It was also reiterated that sectors would only start opening up as part of a “conditional” plan over the next few months. For example:

  • From 1 June — Johnson said the government is hoping that shops will start to reopen and children will start going back to school.

  • Hospitality and personal care businesses, such as pubs, restaurants, and hairdressers, will not be able to open until 4 July at the earliest, during Step Three of the plan first announced by prime minister Boris Johnson on Sunday (10 May).

READ MORE: Coronavirus: UK government says work from home 'for the foreseeable future'

The longer the lockdown continues, the harder it is on the economy — which is why the government is under pressure to give a lockdown exit strategy.

The Bank of England (BOE) recently said that the country’s gross domestic product (GDP) could shrink by 14% in 2020. The UK’s independent budget watchdog, the Office for Budget Responsibility (OBR), also said that the UK economy could contract by as much as 35% in the second quarter of 2020 if the current lockdown persists for three months.