Sterling consolidated against the dollar yesterday, snapping a 3-day losing streak against the greenback as a degree of optimism returned to risk sentiment. However, after a see-saw day against the euro, the pound fell aggressively late in the afternoon session when French media outlet AFP reported that Ukraine President Zelensky is no longer pressing for NATO membership, a delicate issue that was one of Russia’s stated reasons for invading its pro-Western neighbour. In another apparent nod aimed at placating Moscow, Zelensky said he is open to “compromise” on the status of the two breakaway pro-Russian states that Vladmir Putin recognised as independent just before the beginning of the conflict. Market sentiment also improved when it was announced that Russian Foreign Minister Sergei Lavrov and his Ukraine counterpart Dmytro Kuleba had agreed to meet at a forum in southern Turkey on Thursday, the first talks between top diplomats since Russia launched its invasion. With no major data released today, Russia-Ukraine headlines are likely to dictate Sterling’s moves.


The euro found demand yesterday as risk appetite retuned to the market and the safe haven currencies suffered accordingly. This trend has continued in early trading and the single currency is up around 1.25% against the dollar since hitting a 22-month low on Monday. As well as improved market sentiment helping the euro yesterday, its cause was helped further when it was reported that the European Union is discussing a plan to jointly issue bonds on a potentially massive scale to finance energy and defence spending as the bloc copes with the fallout from the Ukraine conflict. According to officials familiar with the preparations, the proposal may be presented after the EU’s informal summit that starts tomorrow. The euro rose as much as 0.6% following the news.


The dollar index retreated yesterday but remains just below its 22-month peak hit on Monday. The greenback found less favour along with other safe haven currencies after the re-emergence of risk appetite following more positive Russia-Ukraine headlines. The US congress appear to be on the cusp of an agreement to allocate billions of dollars in emergency aid for Ukraine and also fund federal government through to the Autumn. Sweeping legislation, awaiting final approval from Democratic and Republican congressional leaders, was expected to provide $1.5 trillion for defence and non-defence discretionary spending and as much as $14 billion to help Ukraine.

Economic Calendar

No major data releases today