IFX Market Report: Monday 29th November 2021

The Euro impressed on Friday, marking a rare session of gains against the Dollar and Pound. The Euro’s strength was due mainly to “position squaring and flows” rather than positive economic news. It’s likely this week the Euro will come under significant pressure, along with other currencies, because of the new Omicron COVID-19 variant. The UK will reintroduce compulsory face masks and travel PCR tests from Tuesday in response to two Omicron confirmed cases in Brentwood and Nottingham. Speaking over the weekend Health Secretary Sajid Javid said the government had acted “swiftly” and “in a proportionate way”, stressing the fact that these measures are in place to “protect the progress we've made so we can all continue to enjoy Christmas with our families”. If the UK must put in place further restrictions or impose another lockdown, Sterling will likely see significant losses.

Cable was able to gain some subtle upside on Friday but still closed the session below 1.3350. GBPUSD opened at 1.3302 and closed at 1.3320.

GBPEUR in contrast made a loss on Friday. The pair opened at 1.1825 and closed at 1.1788

EURUSD was able to surpass the 1.13 handle on Friday, closing the day at 1.1300 exactly having opened at 1.1249.

Europe has introduced measures in response to the new Omicron variant. The Netherlands “will effectively shut down at night for three weeks, starting Sunday”, in an attempt to stop the spread of the virus and relieve pressure on the healthcare system. As of yesterday, from “17:00 to 05:00 non-essential shops, restaurants, bars, and cultural venues will have to close” and “face coverings will be mandatory for many students and teachers, and social distancing will be mandatory in all public places”. Dutch Health Minister Hugo de Jonge said that the admissions of intensive care patients are “extremely high” and medical staff are struggling to cope. Some experts have warned of a “Code Black” situation, meaning medical staff would have to “choose which patients to treat and which not to treat”. With confirmed cases in also Germany, Italy, and Belgium, it’s likely the Omicron variant will be a serious hinderance to the Single Currency.

Older posts
Newer posts