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Outlook remains clouded by Omicron

Outlook remains clouded by Omicron

Pound Sterling was again one of the bigger fallers in a testing period for risk assets last week having eked out paltry gains over only the more risk sensitive currencies like the Australia and New Zealand dollar. 

In level terms, EUR/USD opens this morning below the 1.13 mark, having trading as high as 1.138 last week. GBP/EUR also starts the week above 1.1745, whilst GBP/USD changes hands in the bottom half of the 1.32-1.33 range, as markets have become less confident the BoE will hike rates at its policy meeting next week. 

Looking ahead to this week, markets will likely continue to assess the potential of a quicker paced taper from the Fed. A higher than expected US CPI inflation print is also due on Friday. An increase would firm the odds of QE being withdrawn faster. The other main data release comes from the UK, in the form of October’s GDP print. Sentiment however, is likely to continue to be driven by anything Covid related as the outlook remains clouded by the Omicron variant. 

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