GBP

The pound lost ground against all its major peers yesterday when Bank of England Governor Andrew Bailey warned that the UK’s economy is expected to suffer a growth slowdown amid major rises in energy prices . Speaking at an event held by European economic think tank Bruegel in Brussels , Bailey said, “The shock from energy prices this year will be larger than any single year in the 1970s,” . Traders reacted as Bailey largely stuck to the tone of the debate from this month’s interest rate announcement in which officials softened their language on the need for further rate hikes after they raised borrowing costs for the third time since December. By close of trading sterling had lost over half a cent against both the dollar and euro . Brexit headlines returned yesterday , when Northern Ireland minister Brandon Lewis told the Northern Ireland select committee that he had not seen “ flexibility and pragmatism “ from the EU that he was expecting and blamed EU leaders for the lack of progress suggesting that Maros Sefcoviv the EU’s chief negotiator was being blocked from doing a deal on the Northern Ireland protocol .

EUR

The euro was steady holding within a tight range against the dollar in early trading . The single currency found some support yesterday when the Financial times reported that Russia was no longer demanding that Ukraine be “ denazified” in ceasefire talks . Additionally, the article stated that Russia will accept that Ukraine can join EU if it abandons
NATO aspirations . Russian and Ukrainian negotiators will begin peace talks in Istanbul today and any step towards a ceasefire or a potential peace deal should support the single currency as the euro area is seen suffering the most significant economic impact of the conflict.

USD

The dollar hit a six year high against the Japanese yen , US treasury yields soared to fresh multi year highs and the dollar index hit a two-week high yesterday as traders priced in future aggressive rate hikes by the Federal Reserve Bank . With the central bank now expected to deliver a half point interest rate rise at their May meeting, support for the greenback sent the benchmark 10 treasury yield above 2.5% to a new 3 year high. The main highlight from the economic calendar today is the release of US consumer confidence , although traders main focus will be news from the Istanbul peace talks.

Economic Calendar

14.00 USD US consumer confidence