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Uncertainty for GBP due to Omnicron variant

Thursday 2 December, 2021

Daily Currency Update

GBP - British Pound

The pound declined over the last week due to concerns over the Omnicron COVID-19 variant and the affect it could have on the UK economy going into the winter period. The new Omnicron variant led to lessened expectations for a December interest rate increase from the Bank of England and following BoE Governor Andrew Bailey's less optimistic comments yesterday afternoon, GBP experienced further weakness against the US dollar and euro. In the coming weeks, the focus will very much be on the new variant and expectations of a potential interest rate hike from the Bank of England leading up to its meeting later this month. If the Bank of England goes ahead and raises interest rates on December 16, we may see the pound rally, as such a move could take the market by surprise.

Key Movers

It has been a relatively quiet week for the euro, with yesterday’s manufacturing PMI for the Eurozone coming in below initial estimates, dropping from 58.6 to 58.4, but still showing a slight improvement on the previous month’s score of 58.3. All eyes will be on Christine Lagarde's speech tomorrow morning and it will be interesting to see if she will comment on the jump in inflation seen in the Eurozone, where it hit its highest level on record at 4.9%.

Expected Ranges

  • GBP/USD: 1.3295 - 1.3345 ▲
  • GBP/EUR: 1.1735 - 1.1775 ▲
  • EUR/USD: 1.1305 - 1.1355 ▲