IFX Market Report: Tuesday 15th February 2022

Sterling was able to make minor gains on Monday as global risk sentiment soured due to growing tensions between Russia and Ukraine. Despite Joe Biden and Boris Johnson claiming “not all hope is lost for a diplomatic solution” to the crisis, the situation remains “fragile”. During a 40-minute phone call yesterday between the US President and UK Prime Minister, Johnson reiterated to Biden that the UK was “prepared to do everything it could to help”, to which Biden reportedly responded, “we’re not going anywhere without you pal”.

Today however, risk-sentiment has improved after “reports that some Russian troops in areas near Ukraine have started returning to their bases”. As a result, this morning the Euro was able to rebound and erase nearly all of Monday’s losses. Growing geopolitical tensions had a come as a particular blow to the Single Currency this week and had “kept a lid on the Euro’s gains in recent days”. The Euro fell to a near two-week low yesterday after Ukrainian President Volodymyr Zelenskiy “called on citizens to fly the country's flags from buildings and sing the national anthem in unison on Feb. 16, a date that some Western media have cited as a possible start of a Russian invasion”. But for now, investors have warmly welcomed the latest news. Currencies of economies that would be most affected by the conflict including Sterling and Euro have been able to make upside advances in recent hours, while typically safe-haven currencies such as the Yen and the Swiss franc weakened.

GBPUSD was able to reclaim the 1.35 handle on Monday after starting the week just below that mark. Cable opened the day at 1.3499 and closed at 1.3522.

Sterling was also able to make subtle advances against the Euro on Monday. The pair opened at 1.1935 and closed at 1.1961.

EURUSD traded in a narrow range on Monday. The pair started the session at 1.1309 and closed not far off at 1.1305.

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