GBP/USD is heading higher in Asia as the US dollar slides to fresh lows

At the time of writing, GBP/USD is printing back in the green at 1.32537 after climbing from a low of 1.3231 to a high of 1.3254 in Asia so far. The US dollar is sliding and trades down some 0.11% as measured against six major rival currencies in the DXY index. 

The Benchmark 10-year and 30-year US Treasury yields have pulled back from their one-week highs hit on Tuesday and are sliding further in Asia which is pressuring the greenback. Most other asset classes are in the green with Japanese shares rebounding as investors stay hopeful that the Omicron coronavirus variant may be less disruptive for the global economy than initially feared. 

South Africa was the first country to detect the Omicron variant, since then it has dealt with a massive surge in coronavirus cases. But in the last few days, the trend gave the impression that the situation was improving. For many, this has been highly encouraging. However, levels in testing are not constant so the data is hard to ratify. Nevertheless, the signs, so far, are that the variant is not any more severe than other variants of covid-19 and for now, markets are cheering that. 

BoE eyed

Meanwhile, traders are looking to the Bank of England that is now expected to hold off again next week on becoming the world's first big central bank to raise interest rates from their pandemic lows. On Tuesday, investors were pricing in a roughly 50% chance of the BoE raising Bank Rate to 0.25% on Dec. 16 This lower from around 75% last week but higher than just a one-on-three chance immediately after the speech by MPC's  Michael Saunders on Friday.

Saunders, one of two members of the nine-strong Monetary Policy Committee who voted to raise the Bank Rate to 0.25% in November, said on Dec. 3 there "could be particular advantages in waiting to see more evidence" of Omicron's impact. 

Key data on Dec 10

Looking ahead for the week, the domestic date on Dec 10 monthly will be the Gross Domestic Product report for October. ''Manufacturing likely pulled down on growth with a relatively sharp fall, driven in part by a decline in motor vehicle production, but we see upside risks elsewhere (including for the Index of Services), as consumers pulled forward demand over fears of end-of-year shortages, '' analysts at TD Securities said. ''This would leave GDP growth roughly on track for the BoE's recent forecast of 1.0% QoQ.

On the same day, the US Consumer Price Index (CPI) report is due and economists in a Reuters poll forecast November CPI at 0.7%.