LONDON: Sterling hovered near two-month lows after gyrating in volatile trading on Tuesday as British Prime Minister Boris Johnson unveiled long-lasting restrictions to tackle a second wave of the coronavirus.

New measures, which included extending the use of face coverings, curfews on pubs, bars and restaurants and larger fines for rule-breakers, could be in place for six months, Johnson warned.

“Service is a very important component of the UK industry and leisure and hospitality is the services sector and restrictions will mean less revenues and more pain,” said Kenneth Broux, FX strategist at Societe Generale.

“As a component to GDP, it also diminishes the bounce-back that we may get.”

The pound was last down 0.5% at $1.271, the lowest since late July, giving up earlier gains of as much as 0.13% against the dollar.

The pound was at 92 pence against the euro.

“Sterling’s slide at the beginning of the European session today underpinned the concerns that the investors have for the UK economy, which is right in the middle of this,” said Gavin Friend, senior FX strategist at NAB Group.

The pound recovered a bit in late morning trading after Bank of England Governor Andrew Bailey said the latest policy statement did not imply the BOE would necessarily use negative interest rates, and that observers should not read too much into it.