Monday proved to be a tough session for Sterling. The Pound marked devastating losses against both the Euro and US Dollar yesterday as global risk sentiment worsened. Risk sentiment plunged as tensions over Russia and Ukraine continue to develop. British Prime Minister Boris Johnson said today that it would be “disastrous” if the Russia invade the Ukraine, and the UK are working to “create a package of economic sanctions” against Russia. NATO allies are “sending additional ships and fighter jets to eastern Europe to reinforce defences and increase deterrence, in response to the continuing build-up of Russian forces”. While Russia has denied any intentions for military action, an estimated 100,000 Russian troops have amassed on the Ukrainian border.
Also proving a hindrance to Sterling was mounting political issues in the UK. Downing Street today “admitted that staff gathered inside No 10 to celebrate Boris Johnson's birthday when the first Covid lockdown was still in place”. A spokesperson for No 10 said that “a group of staff working in No 10 that day gathered briefly in the Cabinet Room after a meeting to wish the prime minister a happy birthday. He was there for less than 10 minutes”. Senior Civil Servant Sue Gray is expected to publish her findings later in the week, but it is safe to say if any more damaging news is reported, it is likely the Pound could suffer.
GBPUSD took a sharp turn to the downside on Monday, opening at 1.3537 and closing way below at 1.3453.
GBPEUR also took a tumble yesterday. The pair started the day at 1.1956 and closed at 1.1894.
EURUSD in contrast had an uneventful start to the week. The pair opened at 1.1321 and closed at 1.1311.
On the data front, it’s a quiet schedule today. At 09:00 January’s German IFO Business Climate was published, coming in above forecast at 95.7. At 14:00 the US will release its Housing Price Index for November, followed by CB Consumer Confidence at 15:00.
