You've landed on our UK website.
Click here to visit our USA website.

If you are having difficulty locating the information you require, we're here to help. Just get in touch and we will do our best to assist you.

GBP/EUR soars to new post-pandemic high on Eurozone energy fears

currency-newsGBP/EUR soars to new post-pandemic high on Eurozone energy fears
The euro extended its recent downtrend on Wednesday as EUR investors grew increasingly unnerved by the potential for European energy supplies to be disrupted by the Ukraine crisis.

Meanwhile, trade in the pound is mixed this morning, with GBP/EUR stable €1.2068 and GBP/USD muted at $1.3387. GBP/NZD is rangebound at NZ$1.9733, while GBP/CAD and GBP/AUD have retreated to C$1.6868 and AU$1.8301, respectively.

Looking ahead, could we see an escalation of violence in Ukraine reinforce the euro’s bearish trajectory?

What’s been happening?

The euro struck a new 20-month low against the US dollar yesterday, amidst growing concerns over the war in Ukraine and its potential economic impact on the Eurozone.

Fears that Russian energy supplies to Europe could be disrupted proved particularly damaging to EUR exchange rates, amidst concerns this could exacerbate inflationary pressures within the Eurozone, just as data showed inflation in the bloc rocketed up to a record high of 5.8%.

The US dollar, meanwhile, continued to benefit from risk-off flows on Thursday, although demand for the safe-haven currency was tempered somewhat by Jerome Powell’s testimony in front of Congress.

The Chair of the Federal Reserve suggested it would be ‘appropriate’ to raise interest rates this month, but the medium-term outlook is ‘highly uncertain’ due to Russia-Ukraine war.

At the same time, the absence of any notable UK economic data left the pound mostly rangebound through yesterday’s trading session.

What’s coming up?

With the Ukraine crisis continuing to dominate headlines is likely we could see recent currency trends remain entrenched today, with the euro likely to extend its losses as Russia’s military offensive continues to intensify.

This is also likely to overshadow the release of the Eurozone’s latest unemployment figures, in spite of January’s figures being expected to report a new post-pandemic low.

Also on today’s data calendar is the latest ISM non-manufacturing PMI. Will an acceleration of growth in the US service sector help to buoy the US dollar this afternoon?

In the meantime the publication of the UK’s services PMI could influence GBP exchange rates this morning. If February’s finalised services PMI surprises to the upside -similar to the manufacturing index earlier in the week- then the pound may rise.
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)

Check our exchange rate

Thanks, we'll be in touch.

Check your inbox - one of our currency experts will be in touch to complete your quote.

If you want see our online exchange rates straight away, simply register online & log in.