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Russia-Ukraine news continues to dominate markets

Tuesday 1 March, 2022

Daily Currency Update

Last week the pound fell to its lowest rate against the US dollar since December as Russia’s ongoing invasion of Ukraine caused volatility in currency markets throughout the week. The escalation of the conflict saw investors flock to the safe-haven US dollar. Investors tend to move their money to safe-haven currencies at times of uncertainty. As this week’s trade began, GBP jumped higher against EUR. Tougher sanctions against Russia over the weekend have hit the euro hard, as they could slow economic growth in the Eurozone. Thursday’s final reading of the UK services PMI could boost the pound should it rise as forecast. Additionally, any positive comments from a number of BoE policymaker speeches this week could further bolster the pound.

Key Movers

On Monday investors further reduced expectations for interest rate hikes from major central banks this year, as the West ramped up sanctions against Russia creating fresh uncertainty about the world economic outlook. Aggressive rate hikes were priced in by markets from the likes of the US Federal Reserve, the Bank of England, and the European Central Bank - but since Russia's invasion of Ukraine, these expectations have reduced. In Europe, markets have priced in a 10 basis-point rate hike from the ECB at its September meeting, a change from having first positioned for a June move following the ECB’s hawkish pivot earlier this month.  

Expected Ranges

  • GBP/USD: 1.3395 - 1.3475 ▲
  • GBP/EUR: 1.1930 - 1.1995 ▲
  • GBP/AUD: 1.8405 - 1.8505 ▲
  • EUR/USD: 1.1195 - 1.1255 ▲