GBP / USD falls below 1.3300 as sterling traders worry about the impact of the Omicron outbreak in the UK

• GBP / USD fell below 1.3300 in recent trading and is targeting lows for the year.
• The pair has been weighed in on concerns about an Omicron outbreak in the UK.

The GBP it has been under pressure during US trading hours, retreating from early session highs at 1.3350 to new session lows below 1.3300. That leaves the pair just a few pips above the yearly lows touched last Friday at 1.3278. The recent weakness could be a reflection of fears that the Omicron Covid-19 variant, whose multiple infections have been detected across the UK, poses downside risks to the UK’s economic recovery this winter.

The government warned citizens over the weekend that masks would be required indoors once again and that social distancing was encouraged. Meanwhile, the UK health minister seemed to hint that any potential lockdown restrictions, which have yet to be removed from the table, would be linked to hospitalization rates. An FT article, which claimed that analysts believe Omicron’s impact on the UK economy will be minimal, has been largely ignored.

More broadly, the fact that the US dollar has rebounded amid a surge in long-term US government bond yields (UK long-term yields have seen a much more modest rise on Monday ) is weighing on par. US President Joe Biden’s tone at a press conference on Omicron was relatively upbeat / glass half full. The variant is concerning, but does not cause panic, the vaccine is still expected to protect, as the masks and closures are off the table, for now, was the general message and seems to have propelled US actions, which could be helping the dollar as well.

Technical levels