ECB To Cap Sterling Gains?
The Pound to Euro exchange rate reached another post-referendum high on Monday when it hit 1.2190 and upside risks persist with the war in Ukraine and Thursday’s European Central Bank (ECB) policy decision being the immediate near term drivers.
Pound Sterling rose by 1.2% against the Euro last week in its strongest advance since November as mainland European currencies bore the brunt of the market response to Russia’s ongoing and increasingly destructive attempt to impose itself on Ukraine.
In level terms, the EUR/USD opens this morning below the 1.09 with GBP/EUR still pushing higher to trade circa 1.2125. Continued Dollar strength has also pushed Cable (GBP/USD) under the 1.32 threshold.
Datawise, this week sees the ECB monetary policy meeting. Given the heightened level of uncertainty, the central bank is likely to refrain from providing any clear policy guidance. Elsewhere, market sentiment still remains reactive to developments in Ukraine. This is likely to see volatile trading conditions persist and the euro could remain on the defensive. Indeed, oil prices have spiked further in the last 24 hours, on reports of possible sanctions on some Russian energy exports.