June 26, 2020 / 8:33 AM / 14 days ago

Sterling slips further to $1.24, weighed down by Brexit

* Graphic: World FX rates in 2020 tmsnrt.rs/2egbfVh

* Graphic: Trade-weighted sterling since Brexit vote tmsnrt.rs/2hwV9Hv

By Joice Alves

LONDON, June 26 (Reuters) - Sterling fell 0.2% against the dollar and euro on Friday, weighed down by uncertainty over Brexit negotiations and worries over a second wave of COVID-19 infections as Britain eases its lockdown measures. Analysts said that Brexit is still the key driver holding back the pound four years after Britain voted to leave the European Union.

Sterling is below its pre-referendum levels and little progress has been made in agreeing the country’s future trading relationship with the bloc.

For the British currency, “a wait-and-see approach may prevail ahead of next week’s Brexit talks, still the key driver of the currency,” ING analysts said in a note to clients.

After EU negotiator Michel Barnier highlighted the dim outlook for a breakthrough in Brexit talks on Wednesday, comments on Thursday from his British counterpart, David Frost, injected no new optimism.

Investors have also been cautious over fears of a second wave of infections as British Prime Minister Boris Johnson announced on Tuesday a significant easing of the coronavirus lockdown in England, saying pubs, restaurants and bars can reopen from July 4.

The UK is also having to deal with “fears of upcoming second waves as restrictions are being eased,” ING said.

The pound was below the key $1.25 level versus the dollar at $1.2403 at 0815 GMT, down 0.2% on the day.

The dollar held firm on Friday held firm on Friday as caution over rapid rises in U.S. coronavirus cases cast doubt over the reopening of the economy, keeping demand for the safe-haven currency intact.

Versus the euro, the pound was also down around 0.2% at 90.44 pence, having hit three-month lows against the single currency on Tuesday.

Editing by Larry King

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