We all use to think I was allergic to 'wool', as in the wool yarn my mum bought and used to knit me jumpers.
Now that I spin, I know that I am not allergic to wool at all. I am allergic to something in some of the commercial yarns, but I don't know precisely what. Could be the dyes they use, or something they've scoured with... but it isn't the wool itself.
I am also allergic to lanolin. If I wrap fleeces all day, my skin is red and flarey, and I need a bath and clean clothes.
I do spin 'in the grease', but it's not going all up my forearms when I do that, and doesn't cause me a problem.
I am also not allergic to the dyes I use at home, or at least, not the ones I've tried so far.
So it could be ome - or more - of a hundred and one things, wbf.
Wash some sheep's wool - scalding hot water, lots of shampoo or washing up liquid, DO NOT AGITATE, leave 10 minutes, remove WITHOUT AGITATING, rinse in water the same temperature, again without agitating, rinse until all detergent gone, dry - and gently rub the dry, clean fleece wool up and down your arm. Don't scratch yourself with it if it's rough, just tickle yourself with it like a feather. If your skin doesn't react, it's not wool you are allergic to.