European markets have been hit hard, with rising global Covid cases serving as a reminder of how mutations could derail the recovery. Meanwhile, improved jobs data has helped the pound, but comes to the detriment of the FTSE 100. 

  • Markets tumble as Covid fears dent sentiment 
  • GBP strength hurts FTSE 100 
  • UK jobs market improvements lift the pound 

European markets have been hit hard today, with rising global coronavirus cases serving as a timely reminder that the pandemic is far from over despite recent vaccination progress. Traders appear to be caught between the optimism of a gradual reopening at home and pessimism over the growth in more worrying strains around the world. Despite a rise in vaccinations throughout Europe and the US, those nations are relative outliers rather than the norm. With just 6% of the world having received a vaccine dose, the risk of further mutations remains too high to ignore. 

Risk-off sentiment seen throughout financial markets has done little to boost the US dollar, with the greenback falling into six-week low today. Instead we have seen the Japanese yen provide the basis for any risk-off momentum, with USDJPY turning lower to build on recent losses. Unfortunately, the dollar decline has helped spark a sharp rise for GBPUSD, with the highly internationalised FTSE 100 suffering as a result. A welcome decline in UK unemployment and jobless claims helped boost sentiment for the pound, but that strength does little to help bolster the weakening FTSE. Losses across the travel sector have seen the likes of IAG, FirstGroup, and Carnival lose ground. 

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