The British Pound struggled against the Euro and Dollar yesterday as the UK government announced tighter restrictions to “curb the spread of the virus”. The government’s official press statement confirmed “that England will move to Plan B following the rapid spread of the Omicron variant in the UK… with early analysis suggesting cases could be doubling at a rate as little as 2.5 to 3 days”. From Friday 10th December, masks will once again become mandatory and from Monday 13th December, “those who can will be advised to work from home”. The government are also hoping they are able to implement compulsory vaccine passports for “entry into nightclubs and settings where large crowds gather” but this is yet to be approved by the rest of parliament. Under the new proposed rules, people will be obliged to “demonstrate proof of two vaccine doses via the app”.
Also proving a hinderance to Sterling’s performance is the Bank of England. Due to uncertainty surrounding the Omicron variant the BoE are hesitant to act on monetary policy and will likely keep rates on hold next week. Michael Saunders, arguably the “biggest inflation hawk on the bank’s Monetary Policy Committee”, who voted for a rate hike in November, said “there could be advantages in waiting for more evidence” on the new variant.
GBPUSD started Wednesday at 1.3244 and depreciated on the day, closing finally at 1.3232.
GBPEUR made a more devastating loss yesterday, falling into the 1.16 range. The pair opened at 1.1737 and closed at 1.1680.
EURUSD in contrast made impressive upside moves in the Wednesday session. The pair started at 1.1284 and closed at 1.1328.
On the data front, German Balance of Trade came out this morning at €12.5B. This afternoon the US will release its latest weekly Labour data, followed by Octobers Wholesale Inventories MoM.
