GBP/USD dip buyers take on 1.3320 resistance

• GBP/USD is consolidating and scraping along the bottom of its current cycle range.
• The coronavirus variant remains a concern but traders are buying the dip in the absence of fresh news.

Sterling has recovered from the territories of an 11-month low as traders backed risk-related investments on the back of encouraging words from global officials over the discovery of the Omicron coronavirus variant. GBP/USD printed 1.3287 the low overnight but has since found lots footing again in the 1.3310/20 region where it currently trades in the Tokyo open.

A semblance of calm 

A semblance of calm returned on world markets as it would seem that the severity of the Omicron variant may not be as bad as what was first feared. The variant was first recorded in South Africa last week, triggering a wave of panic among nations and forcing them to tighten border controls. British health authorities, however, have yet to announce any major increase in COVID restrictions.

Additionally, world leaders are sounding optimistic that they can deal variant. Sentiment in markets has been helped by the WHO; while urging caution, the organization noted that symptoms linked to the new strain so far have been mild.  Also, Moderna added to the positive sentiment by predicting it would have a modified vaccine ready by early 2022.

Eyes on central banks

The greenback has benefited in the last few weeks from a hawkish stance by Federal Reserve policymakers in the wake of strong US data, while the pound is ebbing and flowing around the ever-changing Bank of England sentiment. However, the outlook could change for both the Fed and BoE with the emergence of the Omicron coronavirus variant. It is still early days within this two-year pandemic. Markets are pricing in around 8 bps of an increase in interest rates by the Bank of England on Dec. 16. That has fallen from more than 12 bps at the start of last week.