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Pound Hit By Omicron Concerns

Pound Hit By Omicron Concerns

The British pound fell sharply against the euro and ‘safe haven’ currencies after the head of Moderna, Stephane Bancel stated the current suite of Covid-19 vaccines were likely to be materially less effective against the Omicron variant. The fall in global markets echoed those falls of last Friday when investors first took stock of news of the Omicron variant’s likely ability to evade vaccines.

The pound fell against the euro, Swissy and Japanese yen but held ground against the dollar, with the US currency not displaying its usual safe haven characteristics. These developments suggest the Federal Reserve will now have reason to slow its approach to raising interest rates.

In level terms, the GBP/EUR pair opens this morning up near to 1.1765, EUR/USD trades above the 1.13 handle whilst cable (GBP/USD) is picking up but still trades at the lower end of the 1.33 mark. 

Datawise today, the key highlights include the flash reading of Eurozone inflation and US consumer confidence for November. However, unless the data surprise significantly versus expectations, markets will be paying more attention and be more reactive to Covid-19 related news flow given recent developments.

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