- Pound (GBP) eases after two straight days of gains
- Omicron headlines drive movement amid quiet economic calendar
- Euro (EUR) eases lower even as inflation remains a concern
- German imports and Spanish GDP in focus
The Pound Euro (GBP/EUR) exchange rate is edging lower after strong gains in the previous session. The pair settled +0.34% higher on Wednesday at €1.1783, towards the high of the day. At 05:45 UTC, GBP/EUR trades -0.05% at €1.1776.
The pound pushed higher in the previous session helped by a broad risk on mood in the market and despite the UK economy growing at a slower pace than expected in the third quarter, even before Omicron hit.
The UK economy grew at 1.1% in the July to September quarter, revised downward from 1.3%. This was significantly slower than the 5.4% growth experienced in the second quarter and investors are bracing themselves for an even slower pace of growth in the fourth quarter of the year as COVID cases surge.
The UK recorded over 100,000 new daily COVID infections yesterday, the highest level on record. The rapid spread of Omicron is driving the surge in cases, which have risen by 59% over the past 7 days according to the latest government data.
Many companies are struggling with staff shortages as staff self-isolate. The government announced that it was reducing the self-isolation period to 7 days.
Separately a study carried out by London’s Imperial College revealed that the risk of needing to stay in hospital with Omicron was 40% – 45% lower than with Delta.
With no high impacting economic data due to be released Omicron headlines could continue driving trade in the final full day of trading before Christmas.
The Euro fell versus the Pound, but did manage to rise versus the US Dollar, supported by the risk on mood in the market.
Inflation in the region remains a key concern. French producer prices revealed that inflation at the wholesale level rose 3.5% month on month in November, suggesting that consumer prices could continue climbing.
Today there is no high impacting Eurozone economic data. German import numbers and Spanish GDP data could attract some attention.