Home Daily Commentaries The new COVID-19 variant and the pound

The new COVID-19 variant and the pound

Daily Currency Update

GBP - British Pound

The emergence of the new strain of Coronavirus - this time dubbed omicron - led some governments to impose travel restrictions on a collection of African countries and caused panic in global markets. It has since emerged that those who have contracted the new strain so far have displayed only mild symptoms. GBP strengthened slightly versus the USD on Friday with the pair touching an intra-day high of 1.3365, but soon retraced it's gains due to growing concerns around the new COVID-19 variant.

More recently, GBP has benefitted from signals by the Bank of England that UK rate hikes could be due sooner rather than later. Should the Bank of England follow through with this at December's rate decision meeting, we could see the pound strengthen.

Key Movers

The market has been looking for euro interest rates to start rising by the end of 2022. The European Central Bank believes that the current increase in prices will prove transitory, and inflation could fall back below target in the next couple of years, suggesting that rate tightening will not be required in the short term. This softer approach from the ECB has seen the euro come under pressure against the US dollar and the pound.

Expected Ranges

  • GBP/USD: 1.3335 - 1.3385 ▲
  • GBP/EUR: 1.1805 - 1.1865 ▲
  • EUR/USD: 1.1245 - 1.1305 ▼