Pound Euro Exchange Rate Tumbles amid UK Omicron Woes
The Pound Euro (GBP/EUR) exchange rate is tumbling this morning amidst fears the UK government will soon need to impose stricter restrictions amidst record increases in daily Covid cases.
At the time of writing the Pound Euro exchange rate is trading at around €1.1708, down roughly 0.6% from this morning’s opening levels.
Pound (GBP) Stumbles as Government Ponders Pre-Christmas Lockdown
The Pound (GBP) is firmly on the defensive this morning amidst concerns the UK government might soon announce that stricter restrictions are needed to contain the spread of the highly transmissible Omicron Covid variant.
Over the weekend the UK’s Scientific Advisory Group for Emergencies (Sage) published the minutes from its meeting last week, in which the group recommended that the government impose more restrictions in order to prevent the NHS from being overwhelmed.
The minutes read:
‘Without intervention beyond those measures already in place (‘plan B’), modelling indicates a peak of at least 3,000 hospital admissions per day in England. If the aim is to reduce the levels of infection in the population and prevent hospitalisations reaching these levels, more stringent measures would need to be implemented very soon.’
Pressed on when further restrictions could be implemented in an interview on Sunday, Health secretary Sajid Javid refused to rule out the possibility of new measures being imposed before Christmas.
Unsurprisingly the threat of stricter restrictions has placed some notable pressure on the Pound Euro exchange rate this morning, with GBP investors already concerned that the current measures will have undermined economic activity in the key Christmas trading period.
Euro (EUR) Buoyed by USD Weakness
At the same time, the Euro (EUR) is firming this morning, thanks to its strong negative correlation with the US Dollar (USD) as the ‘Greenback’ is undermined by falling US Treasury yields.
However, the single currency’s gains are capped by concerns over Europe’s Covid situation after the Netherlands imposed a full national lockdown over the weekend.
Other countries are also thought to be gearing up for tighter restrictions in the coming days as Europe wrestles with a sizable Omicron outbreak.
Pound Euro Exchange Rate Forecast: Brexit Uncertainty to Also Dent Sterling?
Looking ahead, in addition to Omicron concerns, the Pound Euro (GBP/EUR) exchange rate, could also be infused with volatility by fresh Brexit uncertainty, following the resignation of Brexit Minister David Frost over the weekend.
Frost’s exit will raise questions over the direction of negotiations over the Northern Ireland protocol. While this could prolong talks, some analysts suggest it may also present the opportunity for a ‘reset’ and chance for the UK and EU to find new common ground.
Meanwhile the focus for EUR investors may be the publication of Germany’s latest consumer confidence figures tomorrow morning. Will another deterioration of household sentiment this month drag on the Euro?