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Pound dips as UK minister says lockdown will ease only 'gradually' from March

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Tom Belger
·Finance and policy reporter
·2-min read
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LONDON, ENGLAND - JANUARY 14: Minister for COVID-19 Vaccine Deployment Nadhim Zahawi visits the Cullimore independent community chemist in Edgware after it became the first pharmacy in London to offer access to the COVID-19 vaccination on January 14, 2021 in London, England. Six pharmacies around England began administering vaccines by appointment to qualified recipients, with 200 more scheduled to start over the next two weeks. (Photo by Leon Neal/Getty Images)
Minister for COVID vaccine deployment Nadhim Zahawi visits the Cullimore, an independent community chemist in London. Photo: Leon Neal/Getty Images.

Coronavirus lockdown restrictions in the UK may be eased only “gradually” from March onwards, with a return to a regional tier system, according to a government minister.

Sterling dipped against the dollar and euro on Monday. It comes amid investor gloom about the prospects of the UK economy, hobbled by the resurgent virus and a third nationwide lockdown that began earlier this month.

The pound was down 0.4% against the dollar (GBPUSD=X) at around $1.354, and 0.2% against the euro (GBPEUR=X) to around €1.121.

Nadhim Zahawi, Britain’s new vaccines minister, highlighted the government’s plan to immunise four priority groups by mid-February in an interview with BBC Breakfast. They include the over-70s, care home residents, frontline health and care staff and those classed as clinically extremely vulnerable.

WATCH: Zahawi says lockdown won’t ease before March

But Zahawi noted it would take up to three weeks after jabs for protection to take effect.

He also warned: “One of the things we don’t know yet, and the deputy chief medical officer Jonathan Van-Tam is on record as saying ‘look give me a couple of months and I’ll tell you’, is the impact of the vaccine on transmission rates ie on infecting people.

“So there are a number of caveats that stand in the way of us reopening the economy.”

The pound dipped against the dollar on Monday morning in the UK(18 January). Chart: Yahoo Finance UK.
The pound dipped against the dollar on Monday morning in the UK(18 January). Chart: Yahoo Finance UK.

READ MORE: UK on brink of first double-dip recession since 1970s

Zahawi issued a further warning that vaccine supply “remains challenging,” saying it was limiting rollout capacity.

Professor Stephen Powis, national medical director for the NHS in England, also said on Monday vaccinations would not impact hospital admissions or death rates until “well into February.”

Hospital chiefs have warned the NHS could hit the limits of physical capacity and their ability to operate safely next week amid surging hospital cases of COVID-19.

It comes after official figures on Friday highlighted the economic toll of lockdown restrictions in much of the UK in November.

GDP shrank for the first time since last April, with experts predicting the UK economy is on track for its first “double dip” recession since the 1970s. The 2.6% decline was much less severe than expected by analysts, however.

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