The euro slumped on Thursday following the European Central Bank’s (ECB) latest interest rate decision.
Trade in Sterling is mixed so far this morning, with GBP/EUR buoyed at €1.1664 and GBP/USD muted at $1.3201. GBP/CAD is rangebound at C$1.6714, while GBP/AUD and GBP/NZD hold steady at AU$1.8409 and NZ$1.9369, respectively.
Looking ahead, we may see Omicron concerns continue to infuse volatility into FX markets today.
The pound stumbled through yesterday’s European session, following reports the UK government would be implementing stricter Covid restrictions, amidst concerns over rising cases and the spread of the Omicron variant.
What’s been happening?
This was confirmed by a press conference later in the evening, which pushed Sterling even lower amidst fears 'Plan B’ could stifle the UK’s economic recovery.
The US dollar also trended lower on Wednesday as an upbeat market mood sapped demand for the safe-haven currency. This followed the announcement from Pfizer suggesting its booster jabs should be somewhat effective against the Omicron variant.
Helping to cap these losses however was the latest JOLTs release which reported US job openings climbed above 11 million in October, underpinning the Federal Reserve’s view that the US labour market continues to tighten.
This weakening of the US dollar, helped bolster the appeal of the euro yesterday, with additional support stemming from comments from European Central Bank (ECB) policymaker Mārtiņš Kazāks, in which he suggested the ECB is unlikely to introduce fresh stimulus measures in response to the Omicron variant.
Some disappointing trade figures from Germany may drag on the euro at the start of today’s session, after reporting the country’s trade surplus unexpectedly narrowed in October.
What’s coming up?
Elsewhere the appeal of the single currency could be tempered by concerns over Europe’s Covid resurgence as hospitals in a number of countries come under increasing strain.
The publication of the latest US initial jobless claims will likely be a key focus for USD investors today. Will a fall in new claims in the first week of December help to buoy the appeal of the US dollar?
Finally in the continued absence of any notable GBP economic releases, the pound is likely to remain sensitive to domestic Covid developments and Brexit headlines.
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)