GBP

The pound remains steady against the dollar after benefitting yesterday from a positive shift in market sentiment, which weighed heavily on the greenback and helped risk-sensitive currencies recover sharply. By the London close, sterling had gained over a cent against the dollar. However, against the euro it was a different story for the pound, as the single currency surged, gaining over 1% by the close of European trading. The European Central Bank’s interest rate decision and US inflation both due later today, as well as Russia-Ukraine headlines will be the catalyst for sterling’s moves throughout the day. A survey released earlier this morning by the Royal Institution of Chartered Surveyors (RICS) showed house price growth in the UK hitting an eight-month high in February, as the housing market showed little sign of losing momentum.

EUR

The euro has held on to most of yesterday’s gains which saw it rising over 1.6% against the dollar, as risk appetite retuned to financial markets. The improvement in market sentiment was attributed to optimism ahead of today’s meeting between Russia and Ukraine’s foreign ministers in Turkey and an easing in commodity prices, especially oil. As well as the conflict headlines, markets will now focus the European Central Bank’s monetary policy decision later today. With inflation in the eurozone at record highs, policymakers had been expected to announce an end to years of bond buying stimulus, opening the way for an interest rate hike this year. However, with the shock of Russia’s invasion, they are likely to make as few policy commitments as possible.

USD

After a torrid day yesterday, the dollar is holding its ground against its major currency pairings in early trading. The dollar lost demand, as well as other safe haven assets, as risk sentiment gained impetus fuelled by optimism over today’s peace talks between Russia and Ukraine. However, markets are likely to remain cautious ahead of the talks, as on a negative note Russia’s state-run RIA media outlet said Russia would not concede on their demands earlier today. Consumer inflation data in the US due later today is likely to show another 40-year high in February. The Consumer Price index is expected to show prices rising 0.7% from January to February and 7.9% year-on-year.

Economic Calendar

12.45 EUR ECB Rate Decision
12.45 EUR ECB Monetary Policy Statement
13.30 USD US Consumer Price Index (MoM)
13.30 USD US Consumer Price Index (YoY)
13.30 USD US Initial Jobless Claims