Last week was very eventful for the rate with it briefly dipping down to new 2022 lows before it surprisingly managed to climb out of the dip and reverse a large chunk of the losses. This momentum was siphoned from a consensus beating report on GDP that was released in the UK on top of some disappointing data released on the Euro side from Germany. So far today, the current upwards trend has been continued with the rate showing some slight gains. The Pound may also find room to extend these gains as the Euro comes under pressure again as reports from Ukraine have accused Russia of committing war crimes and genocide, taking a toll on the currency. On top of this, Germany has insisted the need for the EU to look at an import ban on Russian gas, however, this is predicted to have intense repercussions on the Euro. In the meantime, both the UK and EU lack significant data releases meaning the rate will almost solely focus on sentiment in Ukraine and any potential developments.
To kick off the new week, the Pound has found some momentum and initiated a slight climb against the Dollar, with it on track to erase some of the losses we saw last week. This movement will however be met with strong headwinds as the Dollar remains king in the market, with it still finding support in its safe haven status and the prospect of rate hikes from their central bank, the Fed. This comes as hopes of de-escalation between Russia and Ukraine have mostly fizzled out since last week as the war grinds on. This means that the Dollar is likely to find continued support throughout this tough time, capping most of the Pound’s gains against it. To add to this, the UK’s recent absence of market moving data has exacerbated these losses. As for the rest of the day, the Pound may find additional downwards pressure as the BoE’s Andrew Bailey is due to deliver a speech. His recent dovishness has taken a hefty toll on Sterling’s strength, and with him set to continue in this tone losses will likely be sighted later on today. The Dollar also lacks important data today, meaning its trading will be heavily focused on any developments that might come out of Ukraine.
Published by Frank Brightman (04/04/2022)