The British pound has fallen against the euro and the US dollar as expectations that the Bank of England will raise interest rates next week waned amid reports tougher restrictions against Covid-19 were in the offing.
Britain could implement tougher Covid measures, including advice to work from home, as early as Thursday in a bid to slow the spread of the emergent Omicron variant of the coronavirus, according to media reports.
The Bank of England may hold off again next week on becoming the world's first big central bank to raise interest rates from their pandemic lows due to the spread of the Omicron strain.
Against the dollar, the pound slumped 0.5 per cent to its lowest levels since December 2020 at $1.3162. Versus the euro, the pound weakened 0.7 per cent at 85.34 pence.
The US Federal Reserve meets next week, with policymakers flagging in the run-up that an increase in the pace of stimulus tapering is likely, which would set up the possibility of earlier rate rises.
A US Labor Department report on job openings due later on Wednesday should provide further evidence of a tightening labour market, potentially adding fodder for bets on earlier Fed tightening.
