The pound starts the week under pressure against the dollar as safe haven flows continue to support the greenback . Harsher economic sanctions from the West and a report that Russian President Vladimir Putin had Russia’s nuclear deterrent on high alert on Sunday , which the United States said served to escalate the war with “dangerous rhetoric “ weighed on market sentiment . Against the euro , itself under pressure against the dollar , sterling is trading within a tight range . Britain said today it was taking further measures against Russia in cooperation with the United States and European Union , effectively cutting off Moscow’s major financial institutions from Western financial markets . The UK banned any British entities from undertaking transactions with the Russian central bank , finance ministry and wealth fund , and said it would prevent Russian companies from issuing transferable securities and money market instruments .


The euro has recovered some ground against the dollar in European trading after hitting fresh 2022 lows when markets opened in the far east on Sunday evening . The single currency struggled as the EU increased sanctions against Russia . European Commission President Ursula von der Leyen said the bloc would close its airspace to Russian aircraft and they joined the US and UK and decided to shut out “selected “ Russian banks from the international SWIFT payments system after strong initial resistance especially from Germany. The latter feared such a move could harm its own economy enormously because of payments for Russian gas and oil being processed through SWIFT. In the end, international pressure finally saw the German government give up its reservations. European Central Bank President Christine Lagarde said on Friday that the central bank stands ready to take whatever action is needed to ensure price stability and financial stability in the Eurozone, reported Reuters. Lagarde said that it would be premature to assess the exact impact of the conflict in Ukraine just yet, but warned that the two main channels for the economy would be via prices and confidence. Uncertainty is likely to act as a drag on consumption and growth, she continued, adding that optionality and flexibility remain needed.


The dollar is capitalising on safe haven flows in early trading amid escalating geopolitical tensions . Reflecting the risk averse market sentiment, the US dollar index rose 0.7% and the benchmark 10 US treasury bond yield fell . The greenback found another wave of support , when the Washington Post reported that Belarus is likely to join Russia’s invasion of Ukraine , a move that could begin as soon as Monday . However , when Reuters reported that Russia is interested in coming to an agreement that is in the interests of both sides at talks with Ukraine , markets steadied.

Economic Calendar

11.30 EUR ECB’s Panetta Speech
15.50 EUR ECB’s Lagarde Speech