© Reuters. FILE PHOTO: A man walks past a currency exchange outlet in London, Britain, July 31, 2019. REUTERS/Toby Melville/File Photo

LONDON (Reuters) – The British pound slipped to a three-day low on Monday, nearing $1.32 versus the greenback as a broad risk-off mood swept through financial markets.

Growing doubts about U.S. President Biden’s infrastructure program to see the light of day due to Democrat Joe Manchin’s ‘no’ is prompting a rethink about U.S. growth forecasts for 2022 while surging Omicron cases in Europe are driving worries of potential lockdowns. [L8N2T50V3]

The U.S. dollar was the chief beneficiary from the cautious mood with the British pound also hobbled by negative newsflow on the Brexit front.

Foreign Secretary Liz Truss will become Britain’s lead negotiator with the European Union over trade to Northern Ireland following the resignation of Brexit minister David Frost, the prime minister’s office said on Sunday.

Against the dollar, the British pound, edged 0.2% lower at $1.3205. Versus the euro, the pound weakened by 0.4% to 85.24 pence.

At current levels, the pound has erased all its gains sustained on the back of the Bank of England unexpectedly raising interest rates last week.

“Support from the blindsided BoE action in raising rates was only temporary with focus more on Omicron and government disarray,” NAB strategists said.

Britain’s Deputy Prime Minister Dominic Raab said on Monday he couldn’t make any guarantees when asked whether the government would impose further restrictions before Christmas to control the spread of COVID-19.

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