As we previously mentioned it's an escalation of the Covid epidemic that could cause a big stir in the markets. The new South African variant appears to be a serious escalation. The Health Minister, Sajid Javid, commented clearly last night how concerning this new strain is. Previous variants have been met with rhetoric around testing and following the progress. However this new strain has led to an immediate reaction with flights cancelled to the area. The upshot is that oil has taken a knee jerk battering and airline stocks have plummeted. This has had a knock on effect to currency pairs also.
We will be closely following this story today and will put out a newsflash if there are further developments.
The GBP/EUR rate has taken a sharp drop this morning as the technical resistance held backed up by the ECB's President, Christine Lagarde, giving her speech this morning at the Legal Conference. The turmoil around the new Covid variant has also created a high degree of volatility.
GBP/USD also touched a new low briefly before bouncing back quickly. With the US on a half day today following Thanksgiving it's unlikely we will see a true break today.
Outside of the Euro and Dollar rate the Pound looks strong versus other majors such as the Canadian Dollar and the Swedish Krona.
Besides Japanese Retail Sales out over the weekend there's very little else out between now and Monday.
Eyes will be firmly on any further news regarding the new Covid variant.
As ever we look forward to keeping you in the loop and look out for our next update.
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Today’s Economic Calendar
JPN: Sunday 23:50 Retail Sales
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