Nu Variant: Risk Off Drives Pound Lower against Euro and Dollar

"We are not expecting the pound to strengthen against either the dollar or the euro. In fact, the risk is that it weakens against both" - Capital Economics.

The British Pound enters the new week with a supportive wind behind it having earned the distinction of last week's best performing major currency.

GBP is predicted to come under pressure against the Euro and Dollar ahead over coming weeks and months, with a more sustained recovery only likely in the second half of 2022.

HSBC says 2022 will see the Pound deliver an uninspired performance against the Euro and head lower against the Dollar.

A monthly survey of UK business conditions from IHS Markit encouraged expectations for a rate hike at the Bank of England in December, which should in turn keep the Pound relatively well supported.

"Sterling is poised to do what it did from late 1996. Specifically, after four years of weakness following its shock ERM exit in September 1992, the pound gaped-up impressively."