GBP

Sterling has fallen overnight and remains under pressure in early trading following the official announcement of Russia’s invasion of Ukraine by NATO which sparked a rush for safe haven currencies . Media outlets said that Russian forces have launched a major military assault on Ukraine , with reports of missile strikes and explosions in major cities . The pound , regarded by financial markets as a “risk” “ currency suffered as a result . Prime Minister Boris Johnson said he was appalled by the horrific events in Ukraine and has spoken to the Ukrainian President Volodymyr Zelenskiy to discuss next steps. Bank of England Governor Andrew Bailey said on Wednesday there were clear risks that inflation could again overshoot the central bank’s forecasts, but markets should not get carried away about the likely scale of interest rate rises. The central bank forecasts inflation will peak at a 30-year high of around 7.25% in April when a 54% rise in regulated energy bills takes effect . Financial markets are forecasting rates to rise to 2% this year.

EUR

The euro has come under heavy selling pressure against the dollar following Russia’s military attack on Ukraine. Following the attack Ursula von der Leyen head of the bloc’s commission said the EU will hold Moscow accountable for the “unjustified “ attack and the chairman of the German Foreign Affairs Committee said new gas contracts with Russia were inconceivable . European Central Bank Council Member Gabriel Makhlouf said this morning that conflict shouldn’t deter the ECB from a faster wind-down of its asset purchases next month . However , his comments are in direct contrast to those made yesterday by follow policymaker Yannis Stournaras who told Reuters that the central bank should continue its bond buying stimulus programme at least until the end of the year and keep it open ended to cushion the fallout from Russian military action . ECB board member Isabel Schnabel is due to speak later today .

USD

The dollar has benefitted from the intense flight to safety since Russian President Vladimir Putin authorised what he called a special military operation in the East .Shortly after Putin spoke in a televised address , news outlets reported hearing explosions in the Ukraine’s capital Kyiv . Following the attack US President Biden said the US and its allies will impose “ severe sanctions” on Russia . Biden said he would monitor the situation from the White House before meeting online with his counterparts from the Group of Seven advanced economies early on Thursday. The US dollar index is currently trading at its highest level in a month .Later today , the US Bureau of Economic Analysis will release its second estimate of the fourth-quarter GDP data and weekly Initial jobless claims . Traders , however, will remain focused on headlines surrounding the Russia-Ukraine conflict.

Economic Calendar

13.30 USD US Gross Domestic Product (Q4)
13.30 USD US Initial Jobless claims
15.00 USD Fed’s Harker speech
16.00 EUR ECB Schnabel Speech