Sterling fell to its lowest level against the dollar since early September on Tuesday, as investors scrambled for dollar liquidity after Britain toughened its strategy for containing the coronavirus. The pound has felt the weight of fears about the full economic impact of the pandemic. This has sent investors fleeing to assets seen as relatively safe havens. Analysts say the pound is also vulnerable given Britain’s high current account deficit.

The pound fell as much as 2% on Tuesday before recovering slightly. The British currency last traded at such levels back in September, when a no-deal Brexit was imminently feared. Against the euro, it edged up 0.3% but was still trading near the previous day’s six-month low.

Prime Minister Boris Johnson on Monday tightened restrictions and placed curbs on social life in Britain. Analysts expect the Bank of England to take further action to limit the economic fallout at its next meeting on March 26

GBPUSD opened at 1.2206 and fell steadily across the day to close at 1.2046

GBPEUR opened at 1.0984 it ended the day almost unchanged at 1.0989

The U.S. dollar surged on Tuesday as companies and investors sought out the most liquid currency on concerns about economic shutdowns from the global spread of the coronavirus.

The Federal Reserve on Sunday slashed rates to zero and launched a new bond purchase programme. Central banks around the world have taken similar actions but this has not helped to stem liquidity strains and market panic. Central banks have also reduced pricing on their swap lines to ease the provision of dollars to financial institutions.

The Bank of Japan on Tuesday made its most significant injection of dollar funds since 2008 and South Korea also pledged to act soon.

The US currency had initially fallen in early March as U.S. government bond yields tumbled, but the dollar has since rebounded, and measured against a basket of major currencies is now up more than 5% since March 9th. The dollar index was up 1.63% on the day.

The Fed said on Tuesday it would reinstate a funding facility used during the 2008 financial crisis to get credit to businesses and households. Investors are also looking for governments to launch new fiscal stimulus to help offset an economic downturn. President Donald Trump announced a plan on Tuesday to send money to Americans to help deal with the fallout of the coronavirus. Data on Tuesday showed that US retail sales had unexpectedly fallen in February, with households reducing purchases of a range of products, and the coronavirus outbreak is expected to depress sales in the months ahead.

The euro dropped 1.77% against the dollar whilst the dollar rallied 1.82% versus the yen. The Australian dollar, which is sensitive to global trade, fell 2.42%, its weakest since 2003. It is down over 10% since March 9th.

EURUSD opened at 1.1140 and fell sharply across the day, hitting an afternoon low of 1.0963 before closing at 1.0979