Good afternoon,
Yesterday it was announced that England would move to ‘Plan B’ to ‘buy time’ against the Omicron variant as pressure on the NHS mounts and cases continue to rise. GBP fell just over 1% against the EUR, to a low of 1.1630 and 0.80% against the USD to 1.3160, a rate not seen since this time last year in what was a tough day for the pound. EUR-USD had a strong day, moving to highs of the week just above 1.1350, though the bounce back was short-lived as investors headed towards the safe-haven USD throughout the early session, driving the rate back towards the 1.1300 handle.
Health Secretary, Sajid Javid, has said the Omicron variant poses a “credible risk” of crisis in the NHS and with that, new measures come into place to stem the increase in cases. From Friday the 10th of December, face coverings will again become mandatory for most indoor public venues, government advice will be to ‘work from home’ from the 13th and people will need an NHS covid pass or a recent negative test to enter nightclubs and larger venues. The announcement come a week before the Bank of England are due to vote on interest rates which could reduce the likelihood of a rate hike and harm the pounds prospects in the near future.
It’s been a tough start to the day for the EUR against the USD as investors are convinced the Fed will hike interest rates as inflation continues to rise. The USD has also been benefiting from safe-haven status as the mood sours between the US and China after the US announced they would not be sending an official delegation to the 2022 Olympics in Beijing. China has condemned the move and warned nations will ‘pay the price’.
Have a great day.
Thomas Read, Senior Relationship Manager.
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References
https://www.fxstreet.com/currencies/eurusd