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Risk Off Turn Drives Sterling Lower

Risk Off Turn Drives Sterling Lower

A significant ‘risk off’ move on global markets saw Sterling fall against the euro and dollar but rise against its more risk sensitive peers ahead of the weekend.

Markets sold off amidst fears that a newly identified South African Covid variant could escape vaccines and prove more transmissible than the previously dominant Delta variant.

The usual safe haven currencies were bought while the commodity and emerging market pairs were sold.

Currencywise, the GBP/EUR opens this morning circa the 1.1850 region. EUR/USD is operating in the bottom half of 1.12-1.13 whilst cable (GBP/USD) is changing hands just below the 1.33 handle, having spent much of the week near the halfway mark of the 1.33-1.34 trading band. Elsewhere, some risk aversion overnight in Asia-Pacific trading has coincided with some gains for the yen. Reflected in USD/JPY trading lower and operating back down in the lower half of ¥114-115. 

Datawise, a sparse calendar to end the week with the only note being taken from a few prepared remarks from key central bankers including ECB President Lagarde and BoE Chief Economist Pill.

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