European session review: GBP weakens as new COVID strain triggers additional restrictions in Europe, fears of no-deal Brexit heightens

GBP declined against its major rivals in the European session on Monday, as a discovery of a new COVID variant in the UK triggered additional lockdown measures in London and travel restrictions across the Europe, and there was no sign of a breakthrough in trade negotiations between the UK and the EU as the end of Brexit transition period looms. 

The UK's Prime Minister (PM) Boris Johnson was prompted to order additional lockdown measures for London and the southeast of England ahead of the Christmas holidays to contain a new strain of Covid-19, which spreads more quickly than its predecessor. The European countries also imposed strict travel bans to stop the new variant of coronavirus.

Adding to pessimism, the EU-UK talks on post-Brexit trade relations appeared stalled as significant differences remain between the two sides just days before the transition period ends at the end of the year. Ireland’s Foreign Minister Simon Coveney said that the Brexit talks were not in a good place, with fishing remaining the main sticking point. "There needs to be a middle-ground position found on fishing," he noted. "It's very unlikely that EU states will support a further offer on fishing from that offered at the weekend." The two sides have less than two weeks to make a deal.