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Pound Depreciates On New Covid-19 Variant Concerns

The pound fell against its most major counterparts in the European session on Friday, as the emergence of the South African variant sparked growth concerns, prompting traders to reduce their expectations about the possibility of the Bank of England rate hike in December.

Traders are assigning only a 55 percent probability of 15 basis-point rate hike at the December meeting, down from odds of 75 percent seen on Thursday.

Global markets fell, as investors worry about the spread of new COVID-19 variant and its impact on the global economy.

Several countries, including the U.K. tightened restrictions on travel from the southern African region due to the variant of concern.

The U.K. has temporarily suspended flights from six African countries and imposed quarantine on travelers arriving in the U.K.

UK Health Secretary Sajid Javid said that the variant pose great concern and is likely to be more transmissible as well as vaccine resistant.

The pound touched a 10-day low of 0.8477 versus the euro, down from yesterday's close of 0.8406. The pound may locate support around the 0.86 level.

The pound weakened to 1.2319 against the franc, its lowest level since November 12. If the pound falls further, it may test support around the 1.21 level.

The pound dropped to its weakest level since October 7 against the yen, at 151.08. The pound is likely to challenge support around the 149.00 level.

The pound dipped to more than an 11-month low of 1.3278 against the greenback around 3:05 am ET, but it has since rebounded to 1.3341. The pair had closed yesterday's deals at 1.3318.

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