Sterling struggles to gain traction
The Pound steadied but struggled to gain any traction against major currencies. Concerns grew of a major hit to the UK economy given the increases in energy prices whilst increasing inflation will make it increasingly difficult for the Bank of England to set monetary policy. The UK announced aims to phase out Russian oil imports, eliminating them by the end of 2022 and there was notably choppy trading across asset classes, although Sterling moves were relatively limited.
Sterling held just above 1.3100 to the Dollar and the Euro recovered to 1.1990. The Euro gained ground ahead of Tuesday’s New York open with the EU aiming to issue bonds to help finance spending on energy infrastructure and defence spending with the clear aim to reduce dependency on Russian energy imports over the medium term.
In the US, further evidence of strong inflation pressure provided further pressure for a tighter Federal Reserve monetary policy. The US Administration announced an immediate ban on oil imports from Russia which had been expected and oil prices failed to hold intra-day gains in very volatile trading. The dip in oil prices helped trigger a renewed Euro recovery to near 1.0950 to the Dollar.
Currency-market volatility eased this morning with investors monitoring global implications of the Ukraine crisis. Sterling held just above the 1.3100 level to the dollar, the Euro around 1.0915 to the dollar.