Sterling fell following Prime Minister Boris Johnson’s warning that the UK is facing a “tidal wave” of Omicron infections.
Jay Mawji, Managing Director of the global liquidity provider IX Prime, commented: “With the number of Omicron infections being driven up by what Prime Minister Boris Johnson has described as the ‘remorseless logic’ of exponential growth, the chances of a UK interest rate rise this week are heading in the exact opposite direction.
“As the Government sets about doubling the speed of its Covid-19 booster programme and millions of Britons have to work from home once again, the Bank of England is rapidly reassessing whether now is the time to start its long-awaited rate hiking programme.
“Even though there’s a strong chance that Wednesday’s inflation data will be a blowout, the Bank is now almost certain to ignore it and delay a rate rise once again.
“UK equities are holding up well as the markets conclude that Britain’s economy is better equipped to function under the new ‘lockdown lite’ restrictions.
“But with the odds of a December interest rate rise now looking longer than those of a White Christmas, sterling is swooning.”
Leave a Comment