GBP Slips Amid Omicron Worry, Yuan Gains On Smaller Miss In PBOC Fix

Sterling has edged lower as UK health officials raised the Covid alert level to 4, one notch below the upper end of the scale. PM Johnson warned of a "tidal wave" of infections and urged people to get booster jabs amid a rapid spread of the Omicron variant. Some fresh political uncertainty may have helped undermine the GBP. The latest polling data highlighted continued erosion of public confidence in PM Johnson amid a flurry of scandals, with some suggesting that the Tory leader is becoming an electoral liability for his party.

• The PBOC fix drew much attention today, after the previous one missed sell-side estimate by the widest margin on record (i.e. since 2018), signalling that the People's Bank are not comfortable with current yuan levels. Today's miss was more limited, the central USD/CNY mid-point was set 20 pips above the forecast level, putting a fresh bid into the redback.
• The data docket is fairly empty today. ECB's Centeno will speak, the BoE will publish their financial stability report, while the BoC will announce their mandate renewal.
• Looking further afield, this week will see monetary policy decision announcements from at least 20 central banks across the globe, including the Fed on Wednesday.