Ministers prepare quarantine hotels for travellers

• Travellers arriving in the UK could be required to self-isolate in quarantine hotels
• UK government considering tightening quarantine rules due to the emergence of more lethal COVID-19 variants
• EU threatens to block vaccine supplies into the UK
• Pound Sterling (GBP) rebounds against US dollar (USD) and euro (EUR)

There are growing fears that travel will be suspended this summer as UK government ministers prepare to tighten travel restrictions by mandating arrivals from high-risk countries to self-isolate in quarantine hotels.

According to recent news reports, some travellers arriving in England will be forced to quarantine in designated hotels due to concerns over new, lethal COVID-19 variants.

The news comes after data from the Office for National Statistics (ONS) revealed that the UK’s coronavirus death toll has now exceeded 100,000.

UK Prime Minister Boris Johnson is expected to decide on the new travel rules during a cabinet meeting later today but is unlikely to make a public statement until Wednesday.

Several experts have warned that international travel will likely be “out of the question” for the majority of 2021, as UK nationals will also be forced to quarantine in these hotels upon returning to the country.

Travellers facing mandatory hotel quarantine upon arriving into the UK

The UK government already tightened travel restrictions this month after scientists confirmed the emergence of a Brazil variant which was believed to be capable of reinjecting those who have already fought off the Coronavirus.

Currently, all arrivals into the UK must present a negative COVID test taken within 72 hours of departure to be granted entry and self-isolate in a residence of their choice for ten days.

Under the new proposal, arrivals from South Africa, South America, Portugal and Cape Verde will be required to isolate for ten days in quarantine hotels.

There has been no “definitive decision” regarding travellers from other parts of the world. However, ministers could impose the new rules on all arrivals given that people could travel to a country that isn’t on the list for one leg of their journey to evade quarantine.

However, the new system could take weeks to implement due to the logistical challenge of arranging accommodation for thousands of travellers.

Whitehall sources have also said that those quarantining in these designated hotels would be required to pay for the accommodation themselves, which is expected to cost more than GBP 1000.

Countries such as Australia and New Zealand, who have been more successful at containing the virus are already utilising quarantine hotels.

Home Secretary Priti Patel, Health Secretary Matt Hancock and Chancellor Rishi Sunak are all said to support the proposal, which has received direct criticism from the aviation industry.

The airline industry has described the proposal as an “effective closure of our borders” and warned the government that going ahead with the policy would be “catastrophic” for the sector.

A Heathrow airport spokesperson has urged the Chancellor to extend the furlough scheme and provide the aviation industry with a comprehensive financial support package including full rates relief for the duration that the policy is imposed.

With the UK economy already facing a double-dip recession, Prime Minister Boris Johnson comes under increasing pressure to produce a roadmap to ease lockdown restrictions.

The UK also appears to be engaged in a battle with the EU over vaccine supplies, which could trigger further economic headwinds as vaccine rollouts are broadly seen as the way out of the pandemic.

EU threatens to block Pfizer vaccine exports to the UK

European Commission President Ursula von der Leyen has ordered EU pharmaceutical firms to declare vaccine exports to the UK in a bid to quell growing chaos erupting across the continent over its laggard rollout.

The row came after British-Swedish pharmaceutical firm AstraZeneca said that it could not supply 300 million doses of its vaccine to the EU, which was agreed and paid for upfront by the EU last August.

EU officials responded by warning that it would block tens of millions of Pfizer doses from being exported to the UK, which has been met with backlash by senior MPs.

Several MPs have warned that the bloc’s approach to the matter could ‘poison’ relations for a generation. However, Ursula von der Leyen replied by stating that the EU  ” means business ”  about getting its fair share of supplies.

On Tuesday, UK Vaccine Minister, Nadhim Zahawi, said he is confident that Pfizer/BioNTech will continue to deliver the agreed amount of doses to the UK and that Britain will achieve its vaccination target by mid-February.

However, he refused to comment about whether the EU was impeding vaccine supplies into the UK.

NHS England Chief Sir Simon Stevens said the EU was acting bitter due to being under pressure from a supply shortage. He noted that the bloc’s vaccination programme has fallen significantly behind Britain’s and that if there were an unlimited vaccine supply, “you wouldn’t see uproar as it is today.”

The UK has now vaccinated approximately 7million people, and the country’s rapid vaccination programme continues to expand, with an additional 32 mass jab centres expected to open in the coming weeks.

However, with restrictions being tightened and a lockdown extension on the cards due to new COVID variants, will the UK’s vaccine rollout be enough to save the economy, and in turn, pound Sterling?

Pound Sterling rebounds from session lows

Pound Sterling (GBP) exchange rates retreated earlier in the session as a pullback in risk sentiment triggered by lockdown extensions, concerns over COVID-19 mutations and US stimulus disruption renewed demand for the safe-haven US dollar (USD) and euro (EUR).

The British pound (GBP) has recovered against its risk-off rivals heading into the North American session after the International Monetary Fund (IMF) upgraded its outlook for the global economy and a surge in demand for UK government debt.

At the time of writing, the British pound to US dollar (GBP/USD) exchange rate is trading 0.4% higher at USD 1.3727 and appears set on hitting a new 2021 high. The British pound to euro (GBP/EUR) exchange rate is also trading higher at EUR 1.1296 and could breach the EUR 1.13 level if bullish momentum remains intact.

However, the boost in risk sentiment is buoying demand for riskier assets such as the New Zealand dollar (NZD), which has gained significant traction in global currency markets.

The New Zealand dollar (NZD) was the strongest performing major currency on Monday, despite reports of the more contagious South African variant being found in New Zealand.

The “Kiwi” currency is also outperforming on Tuesday, but it seems UK vaccine hopes are limiting pound Sterling’s (GBP) exposure to loss.

At the time of writing, the British pound to New Zealand dollar (GBP/NZD) exchange rate is trading flat at NZD 1.8984, but downside risks remain as the UK’s vaccination programme isn’t the only driver of GBP exchange rates.

Pound Sterling (GBP) must also navigate post-Brexit trade rule friction, ballooning national debt and global coronavirus developments.

GBP traders will also be looking ahead to next week’s Bank of England (BoE) policy meeting to see what will come out in terms of negative rates due to deterioration in the UK economy.