Sterling is weaker against both the euro and the dollar this morning following the announcement yesterday that ‘Plan B’ restrictions will be introduced in England.
The Prime Minister’s press conference revealed that mask wearing will be required in more public places as of tomorrow, working from home will be encouraged from Monday and the NHS Covid Pass will be required for certain venues from Wednesday.
Businesses who rely on the custom of office workers have expressed concern over the new restrictions and are calling for fresh financial support from the government. Shares in hospitality groups have dropped this morning as a result of the new measures.
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GBP: BoE rate hike looks less likely
The pound is weaker this morning following the Prime Minister’s announcement yesterday. News that ‘Plan B’ restrictions will come into place tomorrow and on Monday has prompted sterling to lose value against most currencies.
The working from home guidance prompts worries that spending will be taken away from business districts and certain parts of the economy will suffer.
This new guidance has also decreased expectations of an interest rate hike from the Bank of England next week.
There are no major UK data releases today, but tomorrow GDP and balance of trade figures will be released.
GBP/USD past year
EUR: German inflation data tomorrow
The euro is weaker against the dollar and stronger against the pound this morning.
Data released this morning shows that the trade surplus in Germany fell in October. Imports jumped to a record high due to demand from China. Exports also increased with sales to EU countries rising.
The markets will now await German inflation rate data tomorrow. The rate is expected to rise year-on-year but fall month-on-month.
USD: Dollar strong ahead of jobless claims figures
The dollar is stronger against a basket of currencies this morning but could be on the back foot amid improved risk appetite.
The markets are likely to keep an eye on jobless claims figures, which will be released today and provide an up-to-date view of the labour market.
After this, all eyes will be on the Federal Reserve’s monetary policy meeting next week, when officials are expected to confirm that they will speed up the tapering of their asset programme.