Despite a stern warning from the Prime Minister last night that “there is an Omicron tidal wave coming”, the pound remained unresponsive throughout the evening in Asian trading hours. Due to worsening periods of Covid-19 previously, it was common for the pound to lose value due to the usual flooding of security assets, with the currency usually being the US dollar, Swiss franc or the Japanese yen. Despite this, the pound gained slightly against most except the US dollar this morning. The press conference followed the government’s raising of the Covid-19 alert level to level 4 when the UK was last here was in May earlier this year.
This now raises the question of how the market will react to European and American times over the next few days. Thursday also brings the Bank of England’s decision on interest rates. The monetary policy committee will decide whether or not to raise interest rates for the first time since the start of the pandemic. However, with the implementation of the new Covid-19 warnings, there are fears of negative economic impacts, but these will not be apparent for a few months when the data is collected.
Before the start of the working day tomorrow, unemployment data is released for the UK. A key indicator in determining the state of the labor market, reading will be closely watched by all.
Have a nice day.
Author: Jack Nicholls, Senior Director of Relations.
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