It has since recovered to a little under $1.35, but is still below the level of more than $1.38 hit in October when it seemed as if Britain was decisively moving on from Covid.

Derek Halpenny, head of research at MUFG, said speculators were more likely to be concerned about the potential for further disruption, damaged confidence and new restrictions than the spread of the virus itself.

He said: “It’s the economic implications that would be foremost in the minds of traders.”

Josh Mahoney, of trading platform IG, said markets have been looking beyond the case figures and this helped fuel the recovery in the pound from last month’s lows.

He said: “Traders can focus on the fact that the Bank of England decided to raise rates in the face of rising omicron cases, with a strong chance that the UK will find itself with better herd immunity and an improving economic outlook by the February meeting.”

Jordan Rochester, a foreign exchange strategist at Nomura who believes the pound will weaken against the dollar, said sterling’s recent rise was “largely a Christmas market random walk rather than the start of a new uptrend with the positive impulse from BoE rate hikes already largely priced in”.

Mr Halpenny emphasised that moves this close to the end of December could reflect thin levels of market activity, which can increase volatility, as well as investors adjusting ahead of 2022.

He said: “I’m always very, very wary of putting too much of a fundamental link to price action in the last couple of weeks of the year.”