On Friday we saw a pretty deep sell-off across all markets (FX, Cryptocurrencies & Equities) following news of the Omicron Variant and countries beginning to react. We have already seen numerous countries across Europe begin to put in restrictions over the last couple of weeks, and the news of a new Covid variant has sent markets lower- it also must be noted that due to Thanksgiving, liquidity was relatively low and that Monday should give us a real idea of what markets are doing once liquidity returns.
As the weekend has progressed, many countries, including the UK have found cases of the Omicron variant and decided to put new rules in place, for the UK it seems masks will now be mandated again in public places and on public transport, with the next review in 3 weeks- and the majority of countries now stopping flights to and from Southern Africa.
The markets always fear the unknown, hence the sell-off. Over the coming weeks more research will be done onto this new variant and we will learn how transmissible it is, any health effects and if the vaccines work- hopefully, we will find that vaccines work against it, and we get to see rebounds across the board- there is already some preliminary research suggesting that though it may spread faster, it’s effects are not worse- but please take with a pinch of salt, I am no Doctor!
The Pound has rallied over the last 2 weeks due to the market pricing in an interest rate hike in December, and though I do not personally expect any lockdowns in the UK, I do feel this news is enough for the BoE to put off this decision until February, so they can wait and see- which will probably be the message in the December meeting.
Unfortunately, we are in a place where we have to watch and see what happens before I can give any real analysis, all I will say is that if you have payments to make and the recent sell-off on Friday has made you want to consider your options- please don’t hesitate to contact me.