Pound Sees Boost as UK Saves Restrictions Until After Christmas, US Dollar Stumbles as Growth Slows

Pound (GBP) Boosted as UK Announces No Restrictions Before Christmas 

The Pound (GBP) has risen against many of its rivals today following news that the country will not be introducing any further COVID-19 restrictions prior to Christmas. Uncertainty over a potential pre-Christmas lockdown had weighed heavy on the Pound (GBP) earlier in the week. 

The currency may have seen a further boost in confidence following Tuesday’s news from Chancellor Rishi Sunak of a £1bn support fund for struggling hospitality businesses.  

Looking to the remainder of the week the Pound will likely to continue to be affected by developments surrounding the Omicron variant. Sterling may also be subject to Brexit headwinds this week, as UK foreign secretary Liz Truss steps into the recently vacated role of chief EU negotiator. 

Euro (EUR) Falls as Omicron Hits Consumer Confidence 

The Euro (EUR) has fallen against many of its competitors today as the trading bloc continues to see fresh restrictions introduced in order to combat the Omicron variant.  

Losses for the Euro may be tempered however as multiple European Central Bank (ECB) policymakers such as Peter Kazimir have expressed hawkish outlooks in recent days. This runs counter to the ECB’s stance at their last meeting, and may have prompted some speculative bets by EUR investors. 

Movement in the Euro is also likely to be driven by the developing situation surrounding the Omicron variant, with the introduction of further restrictions likely to push the currency down. 

US Dollar (USD) Stumbles as GDP Growth Rate Falls 

The US Dollar (USD) has stumbled against many of its rivals today following the final reading of disappointing GDP growth figures for the third quarter. Whilst the economy grew above forecasts, 2.3% versus 2.1%, this represents a sharp decline from the 6.7% growth in the second quarter. 

The US economy’s growth could continue to struggle going into 2022 as Goldman Sachs slashed their GDP growth forecasts for the first quarter. This came following news that Democrat Senator Joe Manchin would not be supporting President Joe Biden’s ‘Build Back Better’ legislation. 

Personal income and spending figures on Thursday are both forecast to fall which could push the US Dollar further down should they print as forecast. 

Australian Dollar (AUD) Buoyed by Iron Ore 

The Australian Dollar (AUD) began the day’s session trading within a limited range, but has since been boosted by rising iron ore prices. The ‘Aussie’ may also have been buoyed by news that China cut its borrowing rate for the first time in 20 months. 

The ‘Aussie’ is likely to continue to move with the price of iron ore, but may fall should the country introduce any measures to curb the spread of the Omicron variant. 

Canadian Dollar (CAD) Dips as Oil Prices and Omicron Weigh on Currency 

The Canadian Dollar (CAD) has fallen against many of its rivals today as the commodity-tied ‘Loonie’ continues to be affected by volatility in the crude oil market. Investors remain uncertain of the demand for oil as the Omicron variant causes more and more countries to introduce travel restrictions. 

Thursday will bring GDP growth figures for October which are currently forecast to rise which may provide a boost to CAD. The figures are unlikely to reflect the impact of the Omicron variant however, and if analysts pick up on this then the data may cause little movement for the currency.