GBP/USD Weekly Forecast: Cable at the mercy of US inflation and Omicron, correction seems imminent

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GBP/USD Weekly Forecast: Cable at the mercy of US inflation and Omicron, correction seems imminent
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The Pound has been torn between Omicron optimism and Fed hawkishness GBP GBPUSD $GBP $GBPUSD

ing week, featuring all-important US inflation and retail sales data, GDP from the UK and a covid-watch. : The Federal Reserve's meeting minutes from the December decision were decidedly hawkish. Members saw rate hikes coming sooner and at a faster pace – in addition to signaling a potential reduction of the balance sheet. The prospects of withdrawing money from markets sent stocks down and the dollar up.above 1.

: With every day that passes by, there is more evidence that the Omicron COVID-19 variant is less virulent than previous strains such as Delta. The variant is highly contagious, therefore still threatening to overwhelm the National Health Service , but markets are encouraged by the government's reluctance to impose new restrictions.

Moreover, cases in the Greater London area – where Omicron first landed – have begun falling, providing hope that the tsunami would wash away relatively quickly. Politicians are reluctant to announce bad news over the holiday season . Still, such a move becomes more likely ahead of "Blue Monday" – the third Monday of January, which is arguably the most-depressing period of the year.

Growing pressure on hospitals could still force Prime Minister Boris Johnson into another U-turn. That would pound the pound. On the other hand, optimism from London and its surroundings is a ray of light that could help sterling shine. The British economic calendar remains relatively light, yet November's monthly Gross Domestic Product data is set to stir sterling. After posting a meager growth rate of 0.1% in October, output may have increased faster in the following month.

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