Holidays abroad not likely until August

Culture Secretary, Oliver Dowden, has stated that there are many challenges surrounding the future of international travel for the UK. His statement follows last week’s announcement that holidays abroad before 30^th June would be deemed illegal unless a good reason is given and that it could incur a GBP 5,000 fine.

Whilst it currently remains uncertain as to when exactly Brits will be able to travel abroad, a source from the UK Government has suggested that it may not be possible until August.

Mr Dowden also mentioned that a travel review is currently underway, looking into the potential effects of reinstating foreign travel, the results of which will be available next month.

It has been suggested that a traffic light system could be put in place which would potentially allow for shorter quarantine periods with greater testing measures.

UK travel restrictions so far

As a plan is being put together for the resumption of travel abroad, last year saw the British government attempt to ease the 14-day quarantine travel restriction on international travellers entering the UK and introducing travel corridors with countries less affected by coronavirus.

During their stay, international travellers were allowed to go food shopping, change accommodation and use public transport from airports. The government also expected authorities to spot-check a fifth of these people to ensure that they are staying at the address they provided.

Travellers who failed to provide the government with an address of where they’ll be staying had accommodation arranged by officials. Anyone suspected of breaching regulations was to receive a GBP 1,000 fine in England, governments in Scotland, Wales and Northern Ireland were also free to impose their own penalties.

Some working professions were exempt from these restrictions, such as lorry drivers, police officers, seasonal farmworkers and healthcare professionals.

Travellers from the Irish Republic, the Channel Islands and the Isle of Man were also excluded from the quarantine restrictions.

Some MPs and business executives expressed concern over the UK government’s quarantine plan, warning that it would cause further damage to the aviation and travel industry.

Conservative MP Simon Clarke said that the government’s quarantine travel strategy was “a proportionate step” that prevents the risk of further infections plaguing the UK “at the time that we are getting a grip on it”. He insisted that the policy was a “temporary, time-limited measure”, but would be introduced for as long as required in the interest of public health safety.

Former government Chief Scientific Adviser Sir David King who offered alternative views on the coronavirus at an unofficial version of the Scientific Advisory Group for Emergencies (SAGE) is troubled by the draft plans.

Mr King warned that the UK’s plan lacks rigour when compared to the quarantine process in Europe and south-east Asia. He added: “that the government is leaving too much discretion to the individual. If the legal requirement, which for infectious diseases is set out in the law, is not followed through, then it does spell difficulties. There’s too much emphasis on individual discretion in making key decisions.”

Introduction of travel corridors

Travel and tourism industry representatives went on to warn Ministers that their quarantine plans would continue to cause significant harm to the UK economy.

Airline CEO’s of EasyJet, TUI, Jet2 Airways and Virgin Atlantic said they had “serious reservations” about the government’s “blanket approach” to all arrivals into Britain.

Industry officials called for air bridges, also known as travel corridors, to allow uninterrupted quarantine-free travel to and from countries with low-infection rates such as Australia and New Zealand.

Travel industry experts also warned that the “blanket” 14-day quarantine policy would cost Britain’s tourism sector around GBP 15 billion if imposed throughout the summer.

Over 200 business owners also called for the government to scrap the policy, expressing concerns over the impact it will have on the UK economy, which may dampen pound Sterling (GBP) sentiment.

The British pound (GBP) has seen signs of slight recovery during the new trading week, following last week’s poor performance.

At the time of writing, the British pound to euro (GBP/EUR) exchange rate is trading up at EUR 1.16, and the pound to US dollar (GBP/USD) exchange rate is 0.05% higher at USD 1.38.  However, the potential for further economic fallout will likely trigger a depreciation in the British pound’s (GBP) value, which is already facing pressure from suffering vaccine supplies.

Increased optimism in the global economy is buoying risk sentiment

The British pound (GBP) isn’t the only strong performer in currency markets as the positive outlook on the global economy is driving all risk-sensitive assets higher.

The Australian dollar (AUD) is also top performer in foreign exchange markets, jumping higher against the US dollar (USD) . However, the New Zealand dollar (NZD) and Canadian dollar (CAD) are also extending gains on risk-off currencies.

China’s strengthening economic situation appears to be supporting risk sentiment, although the Australian government’s handling of the coronavirus is underpinning the Australian dollar’s (AUD) strength.

The British pound to Australian dollar (GBP/AUD) during today’s session is trading on at AUD 1.80  (at the time of writing) as the ongoing improvements in the global economy boost commodity prices.

With economic activity resuming in China, demand for Australia’s mineral resources has increased, and as Brazil, who is one of the world’s major iron ore suppliers is experiencing severe supply chains disruptions, Australia has less competition.

The lull in US-China tensions is also proving to support global sentiment and analysts expect that risk-sensitive currencies will remain positively aligned