A risk-off tone dominated markets on Monday leading to US Dollar safe-haven buying against most of its peers. The Coronavirus delta variant is becoming more of a concern with investors fearing that stricter lockdown measures are likely to occur which could prolong the global economic recovery. Many nations are now struggling to curb the rising numbers, and this is now becoming a global issue. Coupled with inflationary concerns too, central banks are under pressure to curb their accommodative monetary policies. Major stocks/indices fell up to 2.5% as a result.

With the rise in numbers of UK delta variant cases too, the government is also being criticised. Some businesses in the UK have described how they are cutting opening hours, closing shops or may have to reduce production as employees are forced to self-isolate after being alerted by the NHS Covid-19 app. The anticipated steep economic recovery in the UK is now under question, Sterling was witness to the larger losses on the day across a broad range of currencies, hitting 5-month lows v Dollar and holding below the pivotal 1.1600 level v Euro.

Dollar strength persists, having seen a 3-month low trade for the Euro on Monday (1.1763). Investors await the latest ECB policy decision and statement on Thursday.