The Dollar Continues Upside Rally, Lockdown Warnings Weigh on Pound Sterling

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Azeez Mustapha

Updated: 13 October 2022

The dollar was the strongest, appreciating against most major rivals. The shared currency was undermined by fears that the economic recovery could take longer than anticipated, as the second wave of coronavirus hits Australia.

The overall markets are relatively steady today. The dollar attempted for a brief rally in the early European session. But it quickly retreated together with a mild recovery in stocks. Though there seems to be no committed buying in the equities market yet, while US futures also point to lower open, risk aversion could come back any time.

As of the time of writing, Yen and Dollar remain the stronger ones for the week, Kiwi and Aussie’s weakest. The sterling is mixed even though UK Prime Minister Boris Johnson announced some coronavirus restrictions that could stay in place for six months.
UK’s Coronavirus Update
GBP/USD traded as low as 1.2709 and settled a handful of pips above this last. The pair started retreating after UK PM Johnson announced new coronavirus-related restrictions, which could last for up to six months. However, he said that this was “by no means a return to the full lockdown of March,” as the aim was to cause the minimum damage to lives and livelihood.

There were 4,926 new confirmed coronavirus infections in the UK as of Tuesday morning, the UK government data showed, per Reuters. This reading followed Monday’s increase of 4,368.

Further details of the daily report revealed that there were 37 coronavirus-related fatalities on Tuesday, the biggest one-day increase since mid-July. Earlier in the day, British Prime Minister Boris Johnson announced new restriction measures to limit the spread of infection.