Trading
Sterling steadies with focus on Ukraine tensions and BoE speeches
Global Banking & Finance Review®
Company
By Joice Alves
LONDON (Reuters) – Sterling steadied on Tuesday against the euro and the dollar as investors awaited speeches from Bank of England officials and watched for developments on the Russia-Ukraine crisis.
Investors are waiting for speeches from Bank of England members of the Monetary Policy Committee Michael Saunders and Catherine Mann, set to speak later in the day.
Markets will pay attention to any comments from the BoE about the impact of the Ukraine’s conflict on its plans to hike interest rates as a surge in oil and other commodity prices has underpinned risks to growth, investors said.
“Since the news (about the conflict) broke, the market has been reassessing the pace of rate hikes from various G10 central banks including the BoE,” said Jane Foley, head of FX Strategy at Rabobank in London.
Risk assets, like stocks and sterling, regained some ground after reports of ceasefire talks between Russian and Ukrainian officials began on the Belarusian border on Monday as Russia faced deepening economic isolation after invading Ukraine.
On Tuesday, Russian Defence Minister Sergei Shoigu said Russia would continue its military operation in Ukraine until it achieved its goals.
“It looks like (some) calm has returned to the markets for now. Rouble is looking stable, assets have a bid tone and so GBP is treading water,” said Neil Jones, Head of FX Sales at Mizuho Bank. “The situation may not last.”
Versus the dollar, sterling was flat at $1.3427. It edged 0.1% up versus the euro at 83.45 pence, after climbing to a three-week high of 83.07 pence last week.
Money markets are currently pricing in 25 basis point rate increase from the BoE in March.
Sterling is poised to be stronger versus the single currency during the Ukraine crisis because Germany’s greater reliance on Russian energy has increased the downside risks for the euro zone, but against the dollar, much will depend on investor’s appetite for the safe-haven currency, Foley said.
(Reporting by Joice Alves; Editing by Edmund Blair)
Explore more articles in the Trading category
