Sterling Drops to a 1-Year Low Against the Dollar, Hits 1.3160
The Great British pound hits a 1-year low against the US dollar. The GBP/USD pair touches 1.3160 as the UK economy faces new curbs.
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Principal Points
- The GBP/USD hits a 1-year low at 1.3160 as investors fear new coronavirus curbs
- Boris Johnson announces Plan B to halt the spread of the Omicron variant
What’s Moving in the Markets?
The British pound slipped to a one-year low against the dollar on Wednesday as the UK economy faced new coronavirus curbs. The GBP/USD pair dropped half a percent to hit 1.3160, a level last seen in December last year.
In detail, the British currency slipped right after UK Prime Minister Boris Johnson announced new measures to control the spread of the Omicron variant. To get into specifics, the “Plan B” unveiled by Mr. Johnson introduces further social and economic restrictions.
First, he ordered that people should work from home where possible, starting Monday. Also, from Friday, masks will be mandatory for all indoor venues, except pubs and restaurants.
“It’s become increasingly clear that Omicron is growing much faster than the previous Delta variant,” said Boris Johnson. “We know the remorseless logic of exponential growth could lead to a big rise in hospitalizations, and therefore sadly in deaths.”
In that context, the sterling’s drop was widespread. The GBP/CAD also dropped half a percent but recovered its losses on the same day.
In that context, today’s decision will most likely create high volatility in the Canadian dollar. Presently, the USD/CAD hovers near 1.2651.
What’s the Big Picture for Traders?
Longer-term, the GBP/USD pair has been in a steady decline. More precisely, the pound has lost over 7.6% against the stronger dollar over the past seven months. With this in mind, traders on both sides of the pair are trying to figure out their next move.
On the one hand, buyers may scoop up the relatively cheap pound in hopes it will rise back up and pare losses. On the other, sellers may attempt to increase the pressure over the exchange rate and push the pound lower.
In other parts of forex trading, the US dollar dropped significantly against the Swiss franc. The USD/CHF pair slipped nearly 0.7% to dive under 0.9200.
What to Watch in the Crypto Markets?
Meanwhile, in cryptocurrency markets, the price of bitcoin remained steady near $50,000 over Wednesday’s trading session. Moreover, the fast-developing asset class has been on a solid upside trajectory for the past four days.
After the crypto market’s steep decline on Saturday, major tokens have already pared their losses. Ether, for example, dropped about 18% over the weekend but has by now gained all it had lost and even climbed above.
More specifically, the Ethereum network’s native coin is presently trading near $4,400 per token. Bitcoin, however, still needs to recover some $3,000 to claw back its weekend losses. Early on Thursday, the price of bitcoin hovers near $50,000 per coin.
Economic Data Coming Up Today (EST times)
On Thursday, traders and investors will be looking for the latest jobless claims report. The data will reveal how many first-time unemployment benefit applications were sent to the US labor department for the past week. The report is used to highlight the state of the US labor market. During the release, higher volatility could be expected in the forex market.