Euro Pound Exchange Rate Mixed in Response to Russia-Ukraine Conflict Fears
The Euro Pound (EUR/GBP) exchange rate is trading flat today amid mounting anxieties regarding a potential conflict between Russia and Ukraine.
At the time of writing, the EUR/GBP exchange rate is trading at around £0.8368, with minimal market movement.
Euro (EUR) Muted amid Surging Geopolitical Anxieties
The Euro (EUR) is subdued against the Pound (GBP) as concerns mount with regards to the potential war breaking out in Europe, right on the EU’s doorstep.
As tensions build between Russia and NATO, many countries have requested their citizens to leave Ukraine in preparation for an invasion.
Presently, German Chancellor Olaf Scholz, is travelling to Kiev and Moscow in a bid to maintain diplomatic avenues and ease the need for military action.
However Scholz has also said that Europe is prepared should further action be required, stating:
‘In the event of a military aggression against Ukraine that threatens its territorial integrity and sovereignty, that will lead to tough sanctions that we have carefully prepared and which we can immediately put into force.’
Pound (GBP) Muted on Brexit Concerns
The Pound (GBP) is rangebound against the Euro (EUR) as Brexit difficulties weigh on GBP’s potential.
The Northern Ireland protocol is yet to be agreed between the UK and EU which is straining on the future relationship between the two nations.
Democratic Unionist Party (DUP) leader, Sir Jeffrey Donaldson, has stated that the Irish Prime Minister doesn’t expect ‘that [the] agreement will be reached this side of an election (May) to remove the Irish Sea Border’.
However, the Labour leader, Sir Keir Starmer, has confirmed that he wants to ‘make Brexit work’.
Starmer said:
‘We’ve exited the EU and we’re not going back. Let me very clear in the north east about that. There is no case for re-joining.
‘What I want to see now is not just Brexit done, in the sense that we’re technically out of the EU, I want to make it work.
‘I want to make sure we take advantage of the opportunities, and that we have a clear plan for Brexit. That’s what I’m working on.’
On the other hand, the Bank of England’s (BoE) hawkish outlook last week is bolstering Sterling’s appeal, following renewed rate hike speculation.
Euro Pound Forecast: Will ECB’s Speech Influence the Euro?
Later today, the European Central Bank’s President, Christine Lagarde, is scheduled to deliver a speech; the contents of which may impact the Euro Pound exchange rate at the end of this afternoon.
Tomorrow, Germany will publish its latest economic sentiment figures.
The ZEW economic sentiment index is predicted to increase from 51.7 to 55, which could lend some support to the Euro.
Meanwhile, the Pound may be weighed on by December’s average earnings which is expected to drop from 4.2% to 3.9%, and has the potential to renew fears regarding the UK’s cost-of-living crisis.
Moreover, geopolitical tensions and unsettled Brexit negotiations have the ability to infuse additional volatility into the Euro Pound exchange rate.