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United Kingdom Fourth Lockdown Announcement?

Updated: Oct 10, 2022

| November 30, 14:05 GMT | By Zain Aveiq

There has been a new Covid variant in the spotlight and it has taken the media by storm. B.1.1.529, Omicron variant was first discovered within a province in South Africa. Since its discovery, there has been 77 fully confirmed cases in Gauteng in South Africa, four cases in Botswana, one in Hong Kong (which is directly linked to travel), Israel, Belgium and as of recent three people in the UK have been found to be infected. The health secretary has stated that the cases in Brentwood, Essex and Nottingham were confirmed by the UK Health Security Agency after genomic sequencing.

Information on the new variant is still limited due to it being early stages, however based of the facts so far, the World Health Organisation says there is a higher risk of reinfection than the other variants. The Omicron has mutations that theoretically help it to spread more quickly and there is mounting evidence of that happening in South Africa, this is due to the new variant having 10 mutations on the ‘receptor binding domain’ compared to just two for the Delta variant and 32 mutations on the spike protein. This could suggest that vaccines which were developed using the original strain may not be as effective. The chief executive of Moderna believes that the existing vaccines wont be as effective at tackling Omicron and warns that it may take several months before a new jab that is more specific to the variant can be manufactured.

Analysis by James Gallagher

A "variant of concern" is the World Health Organization's top category of worrying Covid variants. The decision adds weight to the mounting scientific worry about the potential of this new variant, but it doesn't change any of the facts. The variant has an astounding collection of mutations which are thought to increase its ability to spread and bypass some, but not all, of the protection from vaccines. However, we still don't have the clear real-world data. We don't know for sure that it spreads faster, makes vaccines or drugs less effective or whether it leads to more severe disease.

UK Current Situation

As we are aware so far there has only been 3 confirmed cases of the new variant, however the cause for concern is coming from the average number of daily cases from the effects of the previous variants. Cases in the UK began rising again in early November, a further 39,567 confirmed cases were announced on the 27th November and with the new mutation these figures can rise dramatically.

UK New Measures

The UK government has already started to implement new Covid measures. From the 30th November, face covering will once again become compulsory in shops and public transport. Ten countries are now on the UK travel red list, meaning all arrivals from South Africa, Namibia, Zimbabwe, Botswana, Lesotho and Eswatini will have to quarantine in a hotel for 10 days. In addition, there is also new plans to ramp up booster shots as in the cold times the chances of viruses spreading increases.

Will The UK Announce Another Lockdown?

The UK government have no plans to introduce a lockdown any time soon. All the measures which have been put into place are precautionary measures which will give enough time to study the new mutation. The Health Secretary Sajid Javid has expressed that the new measure could be lifted ‘within weeks‘. However, the PM has refused to rule anything out. 70% of the population have now been vaccinated in the UK, so the likeliness of the lockdown occurring is low until things get extremely out of hand. If scientist confirm that the vaccines are not effective against the new mutation, then there could be a possibility of a ‘firebreak lockdown’, but it seems to be that the winter holidays this year will be considerably better.

How has the market been affected?

The market has already taken a hit on the last day of the trading week (26th November), with the Yen experiencing heavy flows due to investor uncertainty and the sterling losing 1.40% on the announcement of the new restrictions. Moderna's chief's statement caused the European Stoxx 600, FTSE 100 and the Dax to lose 1.3%. Looking back at the Delta variant, we saw that the market went into an extremely risk-off sentiment with the Swiss Franc, Dollar and Yen picking up big bids while the Sterling/Dollar lost almost 3.50% value in a week taking it to the 1.34000 handle. If the mutation is to be proven to be dangerous then history could repeat itself. The sterling against the dollar is currently trading at 1.33000, however if the story is to develop then we can expect the bearish sentiment to continue to cloud the instrument, possibly taking it towards the 1.30000-1.28000 level by the end of the year.

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