Good morning,

Despite a stark warning from the Prime Minister late yesterday that “there is a tidal wave of Omicron coming”, the pound has failed to react throughout the evening in Asian trading hours. Through worsening Covid-19  periods previously, it has been typical to see the pound lose value due to the usual flood to safety assets, in currency this is typically the US dollar, Swiss franc or the Japanese yen. Despite this however, the pound has gained slightly against most but the US dollar this morning. The press conference followed the raising of the Covid-19 alert level by the Government, now at level 4, the last time the UK was here was in May earlier this year.

This now begs the question as to how the market will react through European and US hours throughout the course of the next few days. Thursday also brings the Bank of England interest rate decision. The Monetary Policy Committee will decide whether or not to increase interest rates for the first time since the beginning of the pandemic. However, with the new Covid-19 warnings in place, there are fears of negative economic impacts, but these will not be apparent for a few months when the data is collected.

Before the start of the working day tomorrow, there is unemployment data released from the UK. A key metric to determine the state of the labour market, the reading will be closely monitored by all.

Have a great day.


Author: Jack Nicholls, Senior Relationship Manager.


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