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The U.K. just declared an “Omicron emergency” while a U.S. inflation report all but confirmed aggressive moves from the Fed.

How will these affect GBP/USD’s downtrend?

Before moving on, ICYMI, I’ve listed the potential economic catalysts that you need to watch out for this week. Check them out before you place your first trades today!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

UK declares ‘Omicron emergency’, to give booster shots to all above 18 from this week

Japan’s Oct machinery orders rise by 3.8% (vs 2.1% expected), the first increase in 3 months

Quarterly sentiment among Japan’s large manufacturers unchanged at +18 in December

Rightmove: number of U.K. homes for sale falls to record low in December

PM Ardern says Auckland will move to easier Covid rules at year-end

Oil gains as investors see limited Omicron impact on demand

Germany’s wholesale inflation at record high (+16.6% y/y) in November

Upcoming Potential Catalysts on the Forex Economic Calendar:

Italy’s quarterly unemployment rate at 9:00 am GMT
U.K. banks stress test results at 5:00 pm GMT
BOE’s financial stability report at 5:00 pm GMT
BOE Governor Bailey to give a speech at 5:30 pm GMT
AU’s NAB business confidence report at 12:30 am GMT (Dec 14)
Japan’s revised industrial production report at 4:30 am GMT (Dec 14)

If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.

What to Watch: GBP/USD

GBP/USD 1-hour Forex Chart
GBP/USD 1-hour Forex Chart

Traders took risks during the Asian session as more grow confident that the Omicron COVID-19 variant won’t derail the major economies’ recoveries.

That didn’t stop GBP/USD from getting a fresh selling wave though! The U.K. declaring an “Omicron emergency” did not pass the vibe check so Cable got rejected at the 1-hour chart’s 100 and 200 SMAs.

I’m waiting to see if today’s events will lead to a breakout or an extended consolidation.

There aren’t a lot of top-tier reports scheduled today so risk sentiment and positioning ahead of major central bank decisions will likely move the major currencies.

If traders shrug off the U.K.’s latest “emergency” and take profits from their dollar-buying ahead of this week’s FOMC statement, then GBP/USD could trade above the SMAs to reach a trend line resistance on the 1-hour time frame.

But if traders load up on dollars ahead of the FOMC event, or if the U.K. rolls out more restrictions due to rising COVID-19 cases, then GBP/USD could drop to it December lows or even make new monthly lows.