Home > Resource Hub > Daily Market News > Sterling Shielded By No Further Covid Restrictions

Sterling Shielded By No Further Covid Restrictions

Sterling Shielded By No Further Covid Restrictions

UK consumer borrowing increased to £3.7bn from £1.1bn in the month but Omicron dominates the market’s current focus and as yet it hasn’t affected economic data. The Pound resisted selling pressure and sentiment improved once above 1.3500 to the dollar.

The current UK Prime Minister resisted calls for further Covid restrictions (in England) which shielded Sterling, but concerns remain over the very high case numbers. A dip in demand for defensive assets assisted a peak just above 1.3550 to the Dollar while the Euro posted losses to fresh 22-month lows below 1.1976.

US Fed President Kashkari stated that he expects two rate increases in 2022, although he also noted that there was remarkable economic and policy uncertainty. This shift in perspective from Kashkari adds to expectations  near-unanimous consensus to accelerate the pace of taper and indicate that policy rate hikes should begin once the economy reaches maximum employment

Markets continued to expect a more aggressive Fed stance in the short term and a potential rate increase before mid-2022 which underpinned the US currency.

The Pound opens largely unchanged but with a slightly more cautious risk tone, curbing the potential for further short covering (buying back borrowed currency) and stalling yesterday’s impetus.

Share this case study
Set yourself up in minutes, make payments the same day: it’s free, easy and without obligation.