- GBP/USD rebounded above 1.3250 on Monday from earlier session lows within the 1.3220s.
- Sterling has been holding up nicely regardless of an more and more alarming Omicron backdrop within the UK.
GBP is holding up comparatively nicely versus a broadly stronger US greenback versus its G10 friends on Monday, with GBPUSD at the moment buying and selling solely very barely within the crimson on the session near the 1.3250 stage. GBP is the second greatest performing G10 forex on the day after the US greenback. The rebound from earlier session lows within the 1.3220s comes regardless of the UK PM and well being authorities sounding the alarm about Omicron over the weekend.
Technical shopping for could possibly be lending GBP/USD some help. The pair broke to the north of a long-term downtrend on the finish of final week and appeared to retest this downtrend earlier on Monday’s session. Brief-term technical speculators could have seen this as a great entry level to experience the pair again in the direction of final week’s highs within the 1.3270s.
Over the weekend, UK PM urged British residents to get their booster jabs amid an incoming “tidal wave” of Omicron Covid-19 infections, which the well being secretary Sajid Javid stated now account for about 40% of infections in London. The UK Well being Safety Company additionally suggested that the UK have its Covid-19 alert stage lifted to 4 from its present three and the PM on Monday dominated out the prospect of additional restrictions being imposed forward of Christmas.
In opposition to the deteriorating backdrop within the UK, it appears extremely unlikely that the BoE will press forward with a fee hike. Policymakers have in latest weeks expressed considerations concerning the influence of Omicron on the UK’s financial outlook and these considerations can have solely risen. In opposition to that backdrop, Tuesday’s UK labour market report and Wednesday’s UK Shopper Worth Inflation report can be seen as holding much less sway over policy-making selections. If it wasn’t for Omicron, strategists would seemingly argue that sturdy labour market and inflation information would have been sufficient to swing in favour of a fee hike.
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