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EUR/USD tumbles below $1.04 as tensions with Russia flare

currency-newsEUR/USD tumbles below $1.04 as tensions with Russia flare
The euro nosedived on Thursday, pressured amid a flaring of tensions between Russia and the rest of Europe.

Meanwhile, trade in the pound is muted this morning, with GBP/EUR slipping to €1.1740 and GBP/USD flat at $1.2213. GBP/CAD is also steady at C$1.5886, while GBP/AUD has softened to AU$1.7719 and GBP/NZD is holding at NZ$1.9538.

Looking ahead, will a sharp decline in Eurozone industrial production translate into additional losses for the euro this morning?


What’s been happening?

The euro suffered a sharp selloff yesterday, with investors shying away from the single currency amidst heightened tensions between the EU and Russia.

EUR investors were spooked as Moscow claimed that Finland’s plans to join NATO is ‘definitely’ a threat to Russia, with Dmitry Medvedev, warning on an increased risk of nuclear war in Europe.

The US dollar, meanwhile, traded with a spring in its step yesterday as another slump in equity markets saw investors favour the safe-haven currency.

However, these gains were later tempered after the latest US PPI figures printed below expectations in April.

The pound initially stumbled on Thursday as a lacklustre UK GDP print stoked recession fears.

However, GBP exchange rates quickly recovered, appearing to rise on comments from Bank of England (BoE) Deputy governor Dave Ramsden, as he suggested the bank ‘hasn't yet gone far enough on rate hikes’.


What’s coming up?

The release of the Eurozone’s latest industrial production figures could exert additional pressure on the euro this morning.

March’s figures are expected to report factory output in the bloc slumped sharply as the offset of the war in Ukraine and sharp rise in energy prices disrupted the industrial sector.

For USD investors the focus will be on the University of Michigan’s consumer sentiment index.

Sentiment is expected to have deteriorated this month but could another stronger-than-expected print help to extend the US dollar’s bullish momentum.

In the absence of any notable UK data releases, the pound could find itself vulnerable to fresh Brexit uncertainty as the government pushes to scrap the Northern Ireland Protocol.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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