GBP/USD loses 1.3200 as Omicron fears escalate

• GBP/USD extends losses, with 1.3200 at risk amid intensifying risk-off trades.
• Uncertainties around Omicron restrictions in the UK pound the pound.
• USD fails to benefit from risk-off flows, as Treasury yields sink across the curve.

GBP/USD is trading close to 1.3200, meandering near daily lows, as the sentiment around the pound remains weighed down by the growing uncertainties surrounding the Omicron covid variant-induced restrictions in the UK.

The latest selling wave was triggered by the comments from the UK Deputy Prime Minister Dominic Raab, citing that he cannot guarantee further restrictions, as the Kingdom nears the festive period.

Meanwhile, Germany and France have already imposed border control for travelers from the UK. Britain reported 82,886 new coronavirus cases, bringing the total number of coronavirus cases in the country to 11,361,387. Out of these 82,886 cases, 12,133 were Omicron infections. 

British Health Secretary Sajid Javid is expected to announce on Monday whether social mixing will be curtailed over the Christmas period.

On the latest Brexit update, UK Foreign Secretary Liz Truss is likely to take over negotiations with the EU on the Northern Ireland Protocol following the dramatic resignation of David Frost. Frost stepped down, blaming the “current direction of travel” of the PM’s party.

Looking ahead, the Omicron stats from the UK will continue to impact the GBP valuation amid a sparse calendar. Meanwhile, the risk-off flows will continue to boost the US Treasuries while weighing heavily on the yields, which will eventually cap the dollar’s bullish potential. Although, Javid’s announcement and Brexit news will play a bigger role on cable’s trades on Monday.  

GBP/USD: Technical levels to consider