The pound continues to drift as competing suggestions as to existing vaccines’ efficacy against Omicron hit the headlines.
Indeed, for a quiet week for data it’s been quite a busy week on the currency markets. As well as Omicron, we’ve had the chair of the Federal Reserve saying that inflation is lasting longer than he expected – there’s a phrase to chill savers’ hearts – and therefore that US interest rates could be raised earlier than expected.
In the UK, meanwhile, the odds of a December interest rate rise have now fallen from 90% to 50% as Bank of England rate setters must now consider a general economic slowdown as shoppers and partygoers reconsider their plans.
Exchange rates are delicately balanced and could go either way sharply on a single headline.
This morning we’ve heard that British house prices rose by nearly 1% in November, against an expectation of half that.
The current position of sterling is a great example of loss aversion. Although it feels disappointing because it’s fallen in the past week, sterling is only marginally off its highest point since the pandemic began and a good 4% above its five-year average.
Well worth locking in, in case of a further fall, or variant? The evidence so far is that sterling suffers more than the euro and US dollar when new variants arrive.
Call your trader on 020 8003 4915 to discuss locking in today’s rate for what could be a bumpy year ahead.
