After all the alarms went off on Friday when the Omicron variant hit the headlines, sending the stock market and sterling tumbling, this morning the pound has begun a climb back against the euro. It has already breached €1.18 in early trading.
There is very little recovery yet against the US dollar, which still benefits more than the euro in times of crisis due to its “safe haven” status
It’s not just the health risks, or even the risks to the economy, that spooked the markets last week. It’s the concern that it might damage the chance of an interest rate rise when the Bank of England meets on 16th December.
For the rest of us, however, the words “new variant potentially resistant to vaccines” certainly have the power to shock.
The good news appears to be that it looks more likely that it is resistant to vaccines.
It could be an interesting week on the currency markets. There is very little data coming through the wires in the UK this week, although on Wednesday we’ll see what’s happening to house prices.
Elsewhere, the inflation data for Germany today and the eurozone as a whole tomorrow could affect GBP/EUR.
The new variant means that travellers within Europe will need a PCR test and must quarantine until the results come through – although that can be a matter of hours if done at the airport on arrival.
Other than that travel remains largely unaffected, so if you’re heading for a property viewing trip while the flights are cheap and the resorts are empty, do call your trader on 020 8108 5337 about locking in your rate, so there are no big surprises should something even more serious occur after you have had an offer accepted.
It’s worth pointing out that people who agreed a contract on €200,000 property in the winter of 2020 had a horrible shock when the pound lost 10% almost overnight, needing to find another £20,000 in a hurry. You can avoid that risk with a forward contract.
