GBP

Sterling has begun the day under pressure, suffering as a newly identified and a possibly vaccine-resistant coronavirus variant drove investors out of riskier assets amid fears of a fresh hit to the global economy. The pound has fallen around half a cent against both the dollar and euro in morning trading. Fears of renewed post-Brexit setbacks are also a concern for Sterling. Today, French fisherman plan to block the Channel tunnel and the port of Calais in protest at the failure to issue them with more fishing licences. UK Brexit minister Lord Frost and his EU counterpart Maros Sefcovic will meet in London today to assess whether any progress has been made in negotiations on the Northern Ireland protocol.

EUR

The euro has benefited from risk aversion sentiment this morning caused by new covid headlines. Yesterday’s minutes from the European Central Bank’s October meeting showed that the central bank must keep its policy options open. High inflation is still seen as temporary, but the current rise in prices will be more durable than once thought, raising the risk that wages will also start to rise. Several policymakers are due to speak today.

USD

The intense flight to “safe havens” on Friday is weighing heavily on risk-sensitive currencies and global stocks, supporting the dollar despite falling treasury bond yields. Overnight headlines took markets by surprise with little known of the new covid-19 variant detected in South Africa, Botswana and Hong Kong. European stock markets have opened down sharply, replicating the falls in Asian markets. With no data due from the US today, covid concerns should dictate the greenbacks moves.

Economic Calendar

No major economic data releases are due today