Global fears of a new Covid19 variant first discovered in South Africa caused significant market drops with investors appetites moving to risk-off.
USD
The US Stocks fell in a global selloff over the fears of the new coronavirus type. Typically the dollar has strengthened with new variant announcements, if the market move to a risk-off sentiment the dollar might be one of the currencies to benefit. All eyes are on the Federal Reverse for hopes of a rise in interest rates to continue the dollar uptrend.
GBP
London may be at risk of an outbreak due to its high volume of tourists and new measures are expected to be announced this week. Sterling dipped below $1.33 USD on news of the variant of concern and was also down 0.8% on the EUR. Any lockdown scenario could weaken sterling further but the speculation the Bank of England (BoE) will hike interest rates this December may provide relief but optimism remains cautious.
EUR
The EUR looks set for more volatility with news of the new variant adding to its already strained containment the Delta variant. Soaring numbers of cases sweeping across Europe have been a major concern for the block and unlike the US or UK, the European Central Bank will not hike interest rates until next year squashing hopes of a relief from the downside. The EUR looks unlikely to remain stable.