GBP traded mostly lower against its major counterparts in the European session on Monday as surging coronavirus cases in the UK raised fears that the country would have to impose tougher Covid lockdown measures. The pound was little changed against the U.S. dollar but fell against the rest of major rivals.

The UK's prime minister (PM) Boris Johnson said on Monday that the government would need to toughen coronavirus restrictions even more to cope with the surging epidemic. He also added that the new measures would be announced "in due course". Earlier, the UK's health secretary Matt Hancock indicated that it could happen within the next 24 hours.

According to the latest data by Johns Hopkins University, the UK has recorded 2,662,699 cases and 75,137 deaths linked to the COVID-19 so far. Overall, the total number of confirmed global coronavirus cases has increased to 85,202,384 and deaths have grown to 1,844,687. 

The warnings of harsher Covid measures outweighed the relief over the late-year Brexit trade deal, as well as stronger-than-expected UK's December Manufacturing PMI.

The latest report by IHS Markit revealed the seasonally adjusted final IHS Markit/CIPS Purchasing Managers’ Index (PMI) stood at 57.5 in December, up slightly from the “flash” figure of 57.3 and up from November's final reading of 55.6. The latest reading pointed to the steepest pace of expansion in the manufacturing sector since November 2017. Economists had forecast the index to stay unrevised at 57.3. According to the report, the new orders rose at the quickest pace since August, as intakes improved from domestic and overseas sources as clients brought forward orders to guard against potential disruption caused by the end of the Brexit transition period.