Sharjah24 – Reuters: The euro fell on Monday to trade close to a 16-month low on growing concerns over the impact of new COVID-19 restrictions in Europe, with Austria starting a full lockdown and Germany considering following suit.

Austria began its fourth lockdown, the first introduced since vaccines became widely available, shutting Christmas markets, bars, cafes and theatres.

A fourth wave of infections has plunged Germany, Europe's largest economy, into a national emergency, Health Minister Jens Spahn said, warning that vaccinations alone will not cut case numbers.

The euro slipped 0.25% to $1.122 at 0905 GMT, close to a 16-month low touched on Friday when Austria announced the lockdown.

Versus sterling, the euro edged 0.1% higher at 83.95 pence, after it touched it lowest level against the UK currency since February 2020 as the market weighed Bank of England Governor Andrew Bailey's cautious comments on inflation over the weekend.

Markets expect the BoE to become the first major central bank to raise rates since the start of the pandemic in a bid to tackle inflation that hit a 10-year high as household energy bills rocket.

In the meantime, the dollar got additional support from bullish comments by Federal Reserve officials Richard Clarida and Christopher Waller on Friday who suggested a faster pace of stimulus tapering may be appropriate amid a quickening recovery and heated inflation.

The dollar index, which gauges the currency against six major peers, traded little changed at 96.141, staying within sight of last week's 16-month high of 96.266.

A more rapid end to tapering raised the possibility of earlier interest rate increases too.