© Reuters. FILE PHOTO: Pound Sterling notes and change are seen inside a cash resgister in a coffee shop in Manchester, Britain, Septem,ber 21, 2018. REUTERS/Phil Noble

LONDON (Reuters) – Sterling steadied on Tuesday, still near its lowest in a year versus the dollar, as investors weighed up strong UK jobs data with risks relating to the Omicron variant of COVID-19, ahead of the Bank of England meeting later in the week.

Since the first Omicron cases were detected on Nov. 27 in Britain, the UK has imposed tougher restrictions. But Prime Minister Boris Johnson faces a large rebellion among his Conservative lawmakers in a parliamentary vote over the measures later on Tuesday.

On Sunday, Johnson said that Britain faces a “tidal wave” of the variant.

The pound, which fell on Monday due to Omicron-fears, steadied in early London trading on Tuesday. It edged higher against the dollar and at 0934 GMT was up 0.1% at $1.3219 – still within reach of the one-year low of $1.31615 it hit last week.

The dollar was supported by its role as a safe-haven currency, as well as expectations that the U.S. Federal Reserve would be hawkish at is meeting this week.

Versus the euro, it was little changed at 85.45 pence per euro.

The spread of the Omicron variant has raised fears of an economic slowdown, prompting investors to bet against the Bank of England raising rates at its meeting on Thursday.

But the central bank is under pressure to address fast-rising inflation. UK jobs data showed a record amount of hiring in November, suggesting that the labour market withstood the end of the government’s furlough scheme.

“While England’s fresh Plan B measures are quite light touch for now, the fact they come without any fiscal support introduces some fresh uncertainty on the jobs front going forward,” wrote Deutsche Bank (DE:) strategist Shreyas Gopal in a note to clients.

Deutsche Bank expects a hike, but Gopal said he did not expect sterling to move significantly in either direction if the BoE hikes or holds rates.

UK inflation data is due on Wednesday.

“The economic outlook has been overtaken by Omicron concerns, and we continue to expect no change in policy this week,” TD Securities strategists said in a client note.

Chris Beauchamp, chief market analyst at IG Group said that, as markets view a rate hike as unlikely, “the risk of a short squeeze cannot be discounted” if the BoE has a hawkish tone at is press conference.

Elsewhere, ING FX strategists said that they would be watching to see if the latest rise in European prices provides support for sterling and UK rates.

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