- Pound (GBP) extends gains versus the euro
- UK less exposed than Europe to Russia
- Euro (EUR) falls as Russia attacks nuclear plant in Ukraine
- EZ retail sales rise less than forecast
The Pound Euro (GBP/EUR) exchange rate is rising higher on Friday for a fifth straight day. The pair fell +0.07% on Thursday, settling at €1.2058, after rising as high as €1.2088, the weekly high. At 05:45 UTC, GBP/EUR trades +0.14% at €1.2075. The pair is on track to rise 1.5% across the week.
The Euro is tumbling lower after reports overnight that Russian shelling set a nuclear plant in Ukraine alight. Ukraine has said that radiation levels are unchanged, and the fire is contained. Russian forces now occupy the plant which provides around 20% of power to Ukraine.
As the war in Ukraine escalates and the implications of the sanctions on Russia continue to ripple across the financial markets the Euro remains pressurized.
Data yesterday was mixed. Inflation, at the wholesale level as measured by the producer price index (PPI) jumped to 30.6% in January year on year a record high, suggesting that consumer prices are unlikely to start easing anytime time soon, especially as energy prices continue rising.
Eurozone composite pm was downwardly revised but did improve from last month. Today retail sales added to the downbeat mood towards the euro as sales rebounded much less than expected in January. Retail sales rose just 0.2% month on month, whilst this was up from the -2.7% fall yesterday it was still short of the 1.3% increase forecast.
The Pound is pushing higher versus the euro but remains under pressure versus the US dollar as it too is being driven by sentiment. Whilst the pound is considered a risky currency, compared to the USD and EUR, in this particular situation the EUR is more at risk owing to its geographical location and reliance on Russian energy.
Yesterday’s data revealed that activity in the UK service sector rebounded more slowly than initially expected at 59.9, up from 54.2 but missing the 60.2 forecasts.
There is no high impacting UK data due today.
