With the Bank of England (BOE) December rate hike expectations waning amid growing Omicron covid variant concerns in the UK, analysts at Societe Generale offer their bearish outlook on GBP/USD.

Key quotes

"The pound is often the FX market’s favorite short. Journalists this week have been keen to ask how far sterling can fall in the weeks ahead, by which they mean ‘how far can GBP/USD fall’ with no consideration of the fact that the biggest driver of where Cable goes is what happens to EUR/USD. But sterling found itself some home-grown problems this time."

"For much of this year, GBP/USD has fallen more slowly than EUR/USD, because the UK’s MPC is likely to raise rates long before the ECB. Now, however, a cocktail of economic worries (thanks in part to Omicron) political turbulence (where do I start with the Government’s faux pas?) and the MPC’s policy miscommunications, are feeding bearish sentiment. And the bears are hungry!." 

Read: BOE Preview: Omicron eliminates rate hike chances, voting pattern critical to GBP/USD reaction