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7th March - Weekly FX Update

Top Currency Pairs Monday 7th March 9:00 UTC GBP/USD: 1.31694 (Last Week: 1.33638) EUR/USD: 1.08639 (Last Week: 1.11765) GBP/EUR: 1.21222 (Last Week: 1.19750)

Market News

Pound Sterling The Pound reached another high since the Brexit referendum early this morning, reaching 1.21831 as the Euro and other European currencies bare the brunt of the market response to Russia’s invasion of Ukraine. The war should continue to provide the Pound with upside risk potential as Europe relies upon Russian gas and energy exports. The UK does have significant financial market links with Russia, and with the BoE meeting taking place on the 17th March, investors will be keen to see how the bank are dealing with the complexities of rising geopolitical stress.

Euro The Euro is under extreme pressure as Europe becomes increasingly exposed to Russia’s invasion of Ukraine. The Euro does however have the potential for a more bullish outlook for the remainder of the year, but this is entirely dependent on the ECB and Euro area growth. Meanwhile, with such geopolitical uncertainty weighing on the currency, more clarity is needed for longer-term outlooks and forecasts. The March meeting looked like the ECB were preparing for a dramatic shift in monetary policy which would have massively benefitted the Euro, but this has likely been abruptly halted as a result of the war in Ukraine. The meeting will take place on Thursday 10th, and will give investors a better idea of the ECB’s strategy.

U.S. Dollar The Dollar has gained considerable strength in the markets over the last few weeks, and looks set to continue to do so with a continuation of risk-averse trading. Investors flocked to the safe haven currency as multiple nations banned Russian banks from using the SWIFT payment system, while the threat of potential oil sanctions imposed by the US propelled the Dollar higher. Federal Reserve chair Jerome Powell made some hawkish comments in his testimony in front of congress last week. Ahead of a potential interest rate hike this month, Powell notably announced he was “inclined to propose and support” a rate hike, further bolstering the ‘Greenback’ against other major currencies.

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