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Pound Tumbles as Virus Resurgence Clouds U.K. Recovery Hopes

  • Optimism from vaccine roll-out is slipping: Rabobank’s Foley
  • Options traders are most bearish on sterling since mid-April
Pedestrians walk past a sign warning members of the public about the spread of Covid-19, in Hounslow, London.

Pedestrians walk past a sign warning members of the public about the spread of Covid-19, in Hounslow, London.

Photographer: Justin Tallis/AFP/Getty Images 

Updated on

The pound dropped to the lowest level against the dollar in more than two months as a surge in coronavirus cases dented mounting confidence in the U.K.’s recovery.

Sterling fell as much as 0.9% to $1.3795, its weakest since April 16, after a hawkish Federal Reserve strengthened the dollar this week and the U.K. recorded more than 11,000 new cases of the disease. Pound sentiment for the coming month is at its most bearish since April, according to risk reversals, a gauge of market positioning.