The pound struggled overnight as Asian markets reacted to news that several European countries had closed their borders to the UK.
The European reaction came after a new strain of the coronavirus prompted parts of the UK to return to stricter rules aimed at limiting its spread.
Also reacting to the continuing lack of progress of a post-Brexit trade deal, the pound slid 0.8% to $1.34 and was down about 0.7% against the euro to 91.36p.
Prime Minister Boris Johnson is to chair an emergency response meeting on later today to discuss the virus situation, with fears that a French ban on freight from the UK could result in food shortages with just a few days to go before Christmas.
That, combined with the lack of a Brexit deal, to cut 1% from FTSE futures and 1.5% from EUROSTOXX 50 futures.
In the US, Senate Majority Leader Mitch McConnell said an agreement had been reached on a COVID relief bill worth about $900bn.
Rodrigo Catril, National Australia Bank’s senior currency strategist in Sydney, said: “The lockdown news and the stalemate on Brexit is keeping the market nervous.
“Dollar strength is largely being driven by the move lower in the pound.”