European session review: GBP declines as investors await new UK COVID-19 restrictions; crucial EU summit looms

GBP fell against most other major currencies in the European session on Monday as investors awaited the announcement of the new COVID-19 restrictions by the UK’s PM Boris Johnson, which are hoped to curb growing cases of coronavirus in the country. 

The new round of lockdowns is expected to add pressure to the UK’s economy, which recorded its slowest growth rate in August since it began to recover in May from its deepest contraction on record amid the coronavirus lockdown. 

The decline, however, was limited by increased bets that there will be a trade deal between the UK and the EU. PM Johnson had set a deadline of the October 15 EU summit for reaching an agreement. However, markets believe that the UK’s government may soften this deadline. 

Boris Johnson’s spokesperson stated last week that the latest round of negotiations with the EU was "useful",  but differences remained on important issues. The spokesman also confirmed that informal talks would resume in Brussels next week.

The UK's post-Brexit transition period, during which its future trading relationship with the EU must be renegotiated, is due to end in December.