- GBP / USD extends losses, with 1.3200 at risk amid intensifying risk aversion.
- Uncertainties surrounding the restrictions by Omicron in the UK hit the pound.
- The USD does not benefit from risk aversion flows, as Treasury yields sink through the curve.
The GBP/USD it is trading near 1.3200, snaking near daily lows as sentiment around the pound continues to be weighed down by mounting uncertainties surrounding Omicron-induced restrictions in the UK.
The latest wave of sales was sparked by comments from UK Deputy Prime Minister Dominic Raab, citing that he cannot guarantee further restrictions as the country approaches the holiday period.
Meanwhile, Germany and France have already imposed border control for travelers from the UK. Britain reported 82,886 new coronavirus cases, bringing the total number of coronavirus cases in the country to 11,361,387. Of these 82,886 cases, 12,133 were Omicron infections.
British Health Secretary Sajid Javid is expected to announce on Monday whether social contacts will be reduced over the Christmas period.
About the latest update of the Brexit UK Foreign Secretary Liz Truss is likely to take over negotiations with the EU on the Northern Ireland Protocol following the dramatic resignation of David Frost. Frost resigned, blaming the “current direction of travel” of the prime minister’s party.
Looking ahead, Ómicron’s UK statistics will continue to weigh on the GBP’s valuation amid a tight schedule. Meanwhile, risk flows will continue to drive the US Treasury while weighing heavily on yields, eventually limiting the dollar’s upside potential. Although, Javid’s announcement and Brexit news will play a bigger role in pound trading on Monday.
GBP / USD: Technical levels to watch out for
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