Gentium FX | Daily Report - 1st March 2022 - Ukraine-Russia Talks Yield No Breakthrough

The Pound remains sensitive to any further news about a reduction in gas supply from Russia and potentially higher gas prices. With several MPC members speaking this evening, the market will pay close attention to comments on how the Ukraine conflict will impact the Bank of England’s plans with regards to monetary policy. UK final manufacturing PMI figures are due this morning with the market hopeful of it matching its initial reading.

German consumer price inflation data due this morning is likely to cause some volatility for the common currency – if this comes out as expected then the Euro may see some more strength as the market continues to price in an interest rate hike by the European Central Bank in September. However, further sanctions and a continuation of Russia military action against Ukraine could leave the Euro vulnerable in general to more weakness.

The much anticipated Ukraine-Russia talks end without any update, with Russian troops continuing to advance. This has led to the Dollar strengthening this morning due to its safe-haven status with other safe-haven currencies such as the Japanese Yen and Swiss Franc also appreciating across the board. Close attention will be paid to Russian banks being excluded from the SWIFT payment network and if other countries will introduce quotas on Russian oil and gas.