US News

Sterling falls 0.5% versus euro and dollar



© Reuters. FILE PHOTO: A man walks past a currency exchange outlet in London, Britain, July 31, 2019. REUTERS/Toby Melville/File Photo

By Joice Alves

LONDON (Reuters) -Sterling fell versus the euro and the dollar on Tuesday as traders feared the Bank of England might keep interest rates unchanged amid concerns about the Omicron coronavirus variant.

Omicron was first detected in southern Africa last week, prompting countries around the world to rush to tighten border controls and sending markets into a tailspin on Friday.

“With the 16 December BoE rate decision drawing closer, a worsening of the virus situation globally and specifically in the UK may not only put upward pressure on due to the pound’s higher sensitivity to risk sentiment but may also mean markets could increasingly price out a December rate hike,” ING analysts told clients.

Against the euro, sterling slipped 0.5% at 1700 to 85.15 pence, after touching a two-week low versus the single currency. It fell 0.5% versus the U.S. dollar to $1.3247, after touching a December 2020 low of $1.3194.

The dollar strengthened in the afternoon, after Federal Reserve Chair Jerome Powell said the risk of inflation had increased and suggested retiring the term “transitory” for inflation, while worries about the new Omicron variant kept a bid in safe-haven currencies.

Investors worry that more COVID-19 restrictions would water down expectations for rate hikes in Britain.

The pound had risen around 5% versus the euro this year, finding some support on the expectations that the BoE could raise interest rates faster than the European Central Bank.

Markets are pricing in around 8 bps of an increase in interest rates by the Bank of England on Dec. 16. That has fallen from more than 12 bps at the start of last week.

See also  National Nurses Week brings free Dunkin' coffee, Chipotle burritos to the nation's most-trusted profession
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



READ SOURCE

Leave a Reply