The British pound suffers from imaginary health restrictions – 12/08/2021 at 5:26 pm

The British pound fell sharply against the euro on Wednesday, punished by the prospect of new health restrictions to tackle a new wave of Covid-19, a hypothesis considered by Boris Johnson’s government, according to the British press.

Around 4:10 a.m. GMT (5:10 p.m. in Paris), the pound fell 0.81% to 85.76 pence per euro. Against the US dollar, the decline was more moderate (-0.21% to $1.3216 per pound).

As contamination numbers rise in the UK and the Omicron edition spreads, several UK newspapers reported on government reflections on the new health restrictions.

Downing Street said no decision had been taken at this time, but that currency changers were moving away from the British pound.

“This does not please forex traders as it ends the rate hike envisaged by the Bank of England (BOE) early next week,” said ThinkMarkets analyst Fawad Razakzada.

Markets are divided on exactly which strategy the monetary institution will adopt: put in place a very flexible monetary policy to support an economy weakened by the new wave, or raise interest rates to counter too much inflation?

Before Thursday’s decision, investors will get to see the unemployment rate on Tuesday and inflation in the UK on Wednesday.

For its part, the Canadian dollar fell back (-0.17% against the greenback at 1.2661 Canadian dollars per US dollar) after the Canadian central bank meeting, which took a more cautious tone on the economic outlook than expected.

Australia’s central bank (RBA) met on Tuesday and decided to keep its monetary policy very loose, but remained confident about the economic outlook and promised to study the future of its program in February.

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The Australian dollar, which had already gained ground on Tuesday, continued to rise on Wednesday (+0.53% for the US dollar against the greenback at 1.3971 Australian dollars).

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About the Author: Forrest Morton

Organizer. Zombie aficionado. Wannabe reader. Passionate writer. Twitter lover. Music scholar. Web expert.

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