Pound Euro Exchange Rate Soars as UK Covid Fears Ease
The Pound Euro (GBP/EUR) exchange rate has surged to a near one-month high today amid easing Omicron fears in the UK.
Meanwhile, the single currency is under pressure as several European countries bring in tougher Covid restrictions to curb the spread of the new variant.
Pound (GBP) Strengthens on Reassuring Omicron Data
The Pound (GBP) has strengthened across the board today as promising new data boosts Covid optimism.
Last night, two newly published UK research revealed that people infected with the Omicron variant of coronavirus are far less likely to be hospitalised than those with other strains. One study found that the risk of hospitalisation was 66% less than with Delta. The other found that Omicron patients were 40-45% less likely to need to stay overnight in hospital.
The studies also suggest that a booster jab reduces the risk of Omicron infection by 56%, while it offers even greater protection against the Delta variant.
The studies do come with caveats, however. Vaccines still appear less effective against the Omicron variant, and Omicron is also more transmissible. This means that a surge in case numbers could still lead to large numbers of patients with serious illness, putting considerable pressure on the NHS.
Despite these warnings, the overall positive news has made markets more optimistic.
The Pound may also be boosted by comments from the Health Secretary, Sajid Javid, who has said there will be no more Covid announcements before Christmas. Javid said:
‘We are not planning any further announcements this week. Despite the caution that we are all taking, people should enjoy their Christmases with their families and their friends – of course, remain cautious.
‘We will keep the situation under review. We are learning more all the time as we have done from this new data. We will keep analysing that data and if we need to do anything more we will, but nothing more is going to happen before Christmas.’
GBP investors are feeling a bit more upbeat about the UK’s situation following these pieces of good news.
Euro (EUR) Weakened as Omicron Spreads
Meanwhile, the Euro (EUR) has suffered a sell-off as Covid fears on the continent grow.
As cases of the new variant rise, more and more countries are bringing in tougher restrictions.
Germany, Poland and Portugal are introducing stricter measures after Christmas, while the Netherlands and Austria are already in national lockdowns. Other countries are also considering or implementing new restrictions.
EUR investors are concerned that the introduction of new measures will weigh on the Eurozone’s economic recovery.
In addition, a rebound in the US Dollar (USD) is also pressuring EUR by way of the currencies’ negative correlation.
Pound Euro Exchange Rate Forecast: Limited Movement on Christmas Eve?
With no data out tomorrow, Omicron news is likely to remain a defining factor for the Pound Euro pair. GBP investors will be keeping an eye on the latest figures for UK cases and hospitalisations, while EUR traders will also be watching to see how fast cases rise in continental Europe.
As trading conditions are thin, and with the UK unlikely to make any new announcements, movement may be limited.