Sterling wavered between losses and gains today, at one point slipping to two-month lows against the dollar.

This came as British Prime Minister Boris Johnson imposed new restrictions to tackle a second wave of the coronavirus outbreak. 

The pound was down 0.16% at $1.2795 earlier this morning after recovering as much as 0.13% against the dollar and sliding as low as 1.2714 earlier today, its lowest since July 23.

Sterling stood at 92 pence against the common European currency today. 

Analysts said that 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. 

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

Boris Johnson told people today to work from home and announced new curbs on pubs, bars and restaurants, stopping some way short of a full national lockdown of the sort he imposed in March. 

"Assuming a full two-week lockdown ('circuit-breaker') is avoided, the markets may show signs of relief given there has for some time been a strong assumption that full lockdowns like in March-May would be avoided," MUFG Research said in a note. 

Analysts also said that the UK also has some pretty unique challenges with Brexit. "If a deal is struck, sterling is going to rally hard, and if there isn't, sterling is going to be vulnerable. That's why markets are very flighty on sterling," they added.