Euro weakened by Ukraine concerns
Philip McHugh March 22nd 2022 - 2 minute read
The euro stumbled on Monday as renewed concerns over the war in Ukraine took their toll on the single currency.
Meanwhile, the pound is struggling to find any strong directional bias this morning, with GBP/EUR stable at €1.1967 and GBP/USD subdued at $1.3143. GBP/CAD is rangebound at C$1.6558, while GBP/AUD and GBP/NZD hold steady at AU$1.7791 and NZ$1.9110, respectively.
With the Ukraine crisis back in the spotlight could we witness more currency volatility today?
What’s been happening?
The euro got off to a poor start this week, undermined by fresh concerns over the crisis in Ukraine and its potential impact on the Eurozone economy.
This came as Russia’s offensive intensified, with the shelling of more civilian targets in Ukraine’s major cities.
Adding to the pressure on the euro on Monday were reports that EU officials were mulling a ban on Russian oil.
These concerns helped to underpin demand for the safe-haven US dollar through yesterday’s European trading session.
Aiding the ‘greenback’s ascent were comments from Federal Reserve policymaker Raphael Bostic, who claimed an extremely aggressive rate hike path is appropriate.
Meanwhile, the pound was able to strengthen against both the euro and the US dollar. There didn’t appear to be any clear catalyst for this uptick, leading to suggestions it was prompted by a technical correction following last week’s post-Bank of England (BoE) plunge.
What’s coming up?
Looking ahead, the situation in Ukraine is likely to continue to act as a key catalyst of movement in the currency market.
The euro is likely to remain most sensitive to developments, with the pound also likely to suffer if the conflict continues to intensify.
A speech by European Central Bank (ECB) President Christine Lagarde could inject fresh volatility into the euro if she touches on monetary policy.
The Confederation of British Industry’s (CBI) industrial trends orders index could also influence GBP exchange rates this morning, with Sterling potentially facing some headwinds if orders fell more than expected this month.
Meanwhile USD investors may look to a series of speeches by Fed policymakers for fresh impetus this afternoon.