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Headlines remain with Russia and Ukraine

Daily Currency Update

Russia and the US have agreed to meet in Europe next week to help find a diplomatic solution to the ongoing tensions between Russia and Ukraine. The probability of Russia invading Ukraine remains, but the meeting between the two nations next week has raised hopes that a resolution can be found without conflict.

Outside of these headlines, macroeconomic data was thin on the ground. The US released its Philly Fed manufacturing survey and unemployment claims. The survey from manufacturers running January to February came in under expectation and below the previous month’s figure, and unemployment claims grew to 248k.

GBP/USD has now broken 1.3600 and sustained this move overnight. Disappointing US data saw some FOMC members state on Thursday that aggressive action might be needed on future interest rate hikes, rising the probability that we could see a 0.50% rise next month. This coupled with lowering concerns regarding Russia/Ukraine, saw investor interest in the safe haven US dollar move elsewhere. Investors traditionally seek the US dollar as a safe haven currency during unstable times. GBP/EUR has made a break for 1.2000 a couple of times in the past 24 hours, but again failed to break this psychological level.

This morning, UK retail sales rose 1.9% on the month in January, a jump of 9.1% on the year, as consumers returned to shops after the Omicron surge in late 2021. This will likely support Sterling gains today.

Key Movers

An economic data release from France this morning showed that the unemployment rate fell in the final quarter of last year to the lowest level since 2008, dropping to 7.4% from 8.0% in the previous three months, and better than the expected 7.8%. Euro movement hasn’t taken much direction from this release however, with larger headlines elsewhere overshadowing the news. We are likely to end the week talking and reading about ongoing Russia/Ukraine tensions, along with any data releases that may support the next major bank to raise interest rates. EUR/USD remains range bound for now, bouncing between 1.1300 and 1.1400.

Expected Ranges

  • GBP/USD: 1.3560 - 1.3690 ▲
  • GBP/EUR: 1.1920 - 1.2030 ▲
  • GBP/AUD: 1.8830 - 1.8950 ▼
  • EUR/USD: 1.1320 - 1.1390 ▲