Euro Pound (EUR/GBP) Exchange Rate Stalls amid Growing Geopolitical Tensions
The Euro Pound (EUR/GBP) exchange rate is trading narrowly this morning, amid fears the war in Ukraine could continue for some time.
At the time of writing the EUR/GBP exchange rate is trading at around €0.8624, which is virtually unchanged from this morning’s opening rate.
Euro (EUR) Mixed amid Fears of Prolonged Ukraine Conflict
Trade in the Euro (EUR) is mixed so far today as EUR investors are concerned by the prospect of a drawn-out war between Russia and Ukraine.
Speaking earlier this week, Russian President Vladimir Putin warning the conflict could turn into a ‘long-term process’.
EUR investors were also unnerved by Putin’s comments regarding the rising risk of nuclear war. His comments followed reports of multiple attack carried out on Russian soil.
In an apparent retaliation, Russia launched another wave of attacks against Ukrainian infrastructure. According to reports 1,000 rockets were launched at Ukraine’s power grid overnight.
This followed attacks on the Ukrainian region of Donetsk, where President Volodymyr Zelenskiy said Russian forces carried out a ‘brutal, absolutely deliberate strike’ on Kurakhove.
The latest escalation unsurprisingly weighed on EUR sentiment amid concerns over the impact the conflict is having on the Eurozone economy.
Pound (GBP) Falls amid Increased Industrial Action
The Pound (GBP) is down against the majority of its peers this morning. In the absence of data domestic headlines are guiding trade.
UK businesses continue to report hardships as industrial action impacts the hospitality sector. As rail workers strike for an increase in real wages, pubs and restaurants are reporting a collapse in Christmas bookings.
According to reports, Christmas party cancellations are near Omicron variant levels. The loss of business this season could leave the hospitality industry with £1.5bndeficit. Many businesses rely on the money taken during Christmas to stay afloat in January. A lack of support in December may spell the end for struggling businesses.
This prospect paints a gloomy picture for the UK’s outlook. The implications strike action could have on business activity and potential economic growth are weighing on the Pound today.
Euro Pound Exchange Rate Forecast: ECB Speeches to Lift EUR?
An absence of significant data could the Euro Pound exchange rate guided by European Central Bank (ECB) speeches tomorrow.
Andrea Enria and Elizabeth McCaul are due to speak on Friday. The ECB has been vocal about their desire to keep raising interest rates, but at a slower pace.
With the December’s policy meeting happening next Thursday investors will be eager for any hints. If either speech is hawkish this could raise EUR on the hopes of a more aggressive rate hike. However, a more dovish tilt could dent the Euro.
Turning to the UK, a continued lack of data will likely see the Pound trade on domestic headlines. If more businesses report a drop in activity this could stoke recession fears and dent the Pound.
Otherwise, the increasingly risk-sensitive Pound could be impacted by risk sentiment.
