A dent in sentiment


So far this week the Pound has initiated a slight climb against the Dollar, making for a current 3-day upwards trend. It is evident that the Pound is however experiencing strong headwinds in this uphill battle as many of the gains are capped by the Dollar’s strength. The Dollar has found an added degree of support as sentiment in Ukraine has taken another hit following there being severe allegations against Russia, accusing them of genocide in Bucha, a town 30km northwest of Kyiv. Leaders from around the world joined in condemning the massacre, whilst Russia denied and failed to comment further on the alleged crimes. News of this has also arose calls for more intense sanctions to be placed on the Russian economy. Taking this into account, the war is unlikely to resolve in the near future and is expected to continue for some time meaning the Dollar will find itself with a reinforced safety net and will essentially cap most of the gains seen on the Pound side. As for economic data, the Pound may struggle slightly today, with no significant reports due in the UK. In the States, a data release on Manufacturing is expected later on, but this may be overlooked as markets focus on any developments in Ukraine.


This past week this Pound has climbed quite significantly against the Euro, this comes as fresh developments in Ukraine dent sentiment and amount calls for additional sanctions to be placed on Russia, following accusations of the Russian military committing war crimes in Bucha, a town near Kyiv. At this stage, the euro’s performance is very strictly tied to the content of new sanctions the EU looks likely to impose on Russia, the bigger the implications for the energy market, the larger the impact on the Euro. Yesterday, French President Macron said that some very clear measures are under discussion and that he supports sanctions on coal and oil. For now, it still looks unlikely that EU imports of Russian gas will be reduced, but further moves on curbing dependence on Russian oil appear possible. Details of new sanctions will likely be announced in the coming days and until then it is unlikely that the Euro will recover, allowing the Pound to climb further against it.

Published by Frank Brightman (05/04/2022)

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