Pound Posts Gains despite Covid Fears

Pound (GBP) Shows Resilience despite Omicron Concerns 

After initially stumbling, the Pound (GBP) managed to end yesterday’s session higher against many of its rivals, despite the ongoing pressure on the NHS. 

GBP investors also shook off the UK’s finalised services PMI, which confirmed a sharp slowdown in December due to the emergence of Omicron. Pressure on Sterling may have been tempered by Bank of England (BoE) rate hike bets. 

Omicron news could be the main driver of GBP exchange rates today, with any negative headlines potentially weighing on the Pound. 

Euro (EUR) Fluctuates following German Data 

The Euro (EUR) struggled for direction yesterday, unable to sustain a meaningful upside despite some strong German data. 

Factory orders in Europe’s largest economy jumped 3.7% in November, beating forecasts. In addition, Germany’s inflation rate rose by 0.1 percentage points to 5.3%, rather than dropping to 5.1%. 

EUR investors will be looking to the Eurozone’s latest flash CPI this morning. Will it also overshoot, thereby pressuring the European Central Bank (ECB) to take a more hawkish tone? 

US Dollar (USD) Sheds Some Post-Fed Gains 

The US Dollar (USD) experienced some turbulence yesterday, losing some of its post-Fed gains, as the latest economic data disappointed investors. 

Initial jobless claims edged up, while the US ISM services PMI dropped from 69.1 to 62, well below forecasts of 66.9. As with in the UK, soaring Omicron cases hit US service-sector growth hard. 

This afternoon’s non-farm payrolls data could see USD regain the upside. Forecasters expect the US economy to have added 400,000 jobs last month, which would fuel the Federal Reserve’s hawkish sentiment. 

Canadian Dollar (CAD) Gains as Oil Prices Rise 

The Canadian Dollar (CAD) strengthened through yesterday’s session as oil prices continued to rally. The rise in crude prices came amid continued unrest in Kazakhstan, an OPEC+ producer, and outages in Libya. 

Turning to today, Canada’s latest employment data and Ivey PMI could influence movement, although economists expect rather lacklustre results. 

Australian Dollar (AUD) Stumbles amid New Covid Measures 

The Australian Dollar (AUD) ticked lower in overnight trade as several Australian states brought in new Covid restrictions. 

New Zealand Dollar (NZD) Firms as Market Mood Improves 

The New Zealand Dollar (NZD) managed to edge higher overnight amid a modest upturn in risk appetite. However, it seems to have lost those gains at the open of the European session. 

Samuel Birnie

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