Image still of leaked footage confirming claims of an illegal Christmas party in Downing Street in 2020. Still courtesy of ITV News.

Under-fire Prime Minister Boris Johnson appears to have rushed forward plans to introduce tighter Covid-19 restrictions in order to slow the spread of the Omicron variant, but they will exact a toll on UK businesses, consumer sentiment and ultimately the Pound.

According to Alex Wickham, Editor of POLITICO's London Playbook, Johnson is considering implementing "Plan B restrictions with Omicron variant surging - a COVID press conference is planned imminently".

Plan B involves working from home and the potential for some kind of Covid passport scheme.

The developments have since been confirmed by a host of other journalists.

Noa Hoffman at Politics Home says measures are coming and that a Work from Home order will be in place from tomorrow.

A press conference will announce the instruction at around 5PM GMT.

A Work from Home order will have a significant impact on economic activity and would likely prove extremely damaging to businesses that rely on office workers.

The developments will likely slow economic activity into year-end and all but convince the Bank of England that now is not the time to raise interest rates.

Markets now anticipate a rate hike in February, but the risk posed to the economy by the government's response to Omicron might soon see investors lower the odds - or expected scale - of a February rate hike.

This would add further pressure to Sterling exchange rates which is sensitive to fading hike expectations.

Talk of a move to tighten Covid restrictions emerged as the Prime Minister came under searing heat for denying a Christmas party took place in Number 10 one year ago; despite the emergence of clear evidence that it did in fact take place.

Chatter suggested the introduction of tighter Covid rules is a direct effort to try and shift focus away from the scandal.

Tom Newton Dunn at Times Radio says there are signs the decision to implement Covid controls are indeed rushed:

"There is disquiet about how quickly this decision process is moving in Whitehall. I’m told the Covid Taskforce is yet to even submit papers to the PM and Health Secretary on Plan B, which were due later in the week."

Reference rates:

Pound to Euro: 1.1760 \ Pound to Dollar: 1.3279High street bank rates (indicative): 1.1530 \ 1.3000Payment specialist rates (indicative: 1.1700 \ 1.3213Find out more about specialist rates, hereSet up an exchange rate alert, hereBook your ideal rate, hereFormer aide to Johnson, Dominic Cummings, tweeted in the wake of the video evidence proving Number 10 did in fact host a party that "regime change is coming".

Cummings has been highly critical of the Prime Minister since his departure from his role and his view is considered speculative.

But, if correct, any pressure on Johnson to move aside poses further risks to the Pound which tends to underperform during times of domestic political uncertainty.

Regardless, the economy will be the biggest loser of these decisions and the Pound would likely reflect these developments.

Incoming short-term data suggests consumers are already in retreat, fearing a new wave of the virus at some point in the future.

A significant domestic and global focus on the Omicron variant is the source of new anxieties with real-time data showing consumers are retreating from communal spaces such as gyms, pubs and restaurants.

Given the services sector accounts for the largest segment of the UK economy, this suggests a slowdown into year end.

"Real-time indicators suggest that the consumer services sector already has been knocked back since the news of the Omicron variant emerged last week," says Samuel Tombs, Chief UK Economist at Pantheon Macroeconomics.

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Ahead of any new decisions on Covid restrictions the Pound to Euro exchange rate is trading lower on the day at 1.1730, the Pound to Dollar exchange rate is lower at 1.3240.

Simon Harvey, Senior FX Market Analyst at Monex Europe, says the impact to UK activity won't be isolated and the broader context must be considered.

"Cable sitting in the 1.32's is largely due to sentiment as opposed to fundamentals in the short-term. Think next week's labour market data will confirm this along with Q4 GDP once released. Yes, variant concerns will impact consumption etc, but this isn't isolated to the UK," he says.

But if some of Sterling's performance over recent weeks linked to a view that the UK was better placed than other countries - thanks to vaccine penetration and the removal of rules - then there is opportunity for some of that outperformance to be returned.