Pound Euro (GBP/EUR) Exchange Rate Gains as Peace Talks Falter
The Pound Euro (GBP/EUR) exchange rate is steadily climbing today. A positive risk-on market mood is helping to boost Sterling. Reports of civilian massacres in the town of Bucha have lessened prospects for a diplomatic solution to the conflict. The reports have also weighed upon the Euro (EUR) today.
Pound (GBP) Bolstered amid Risk-On Trading
The Pound (GBP) is being buoyed against the Euro (EUR) today but struggling to make gains elsewhere. A dovish outlook from the Bank of England (BoE) is likely continuing to weigh on GBP.
Whilst peace talks between Russia and Ukraine are set to resume today, reports from the town of Bucha are likely to limit progress. Russia is accused of atrocities in the town after Ukrainian forces retook the area last week. Witnesses told Reuters that they had seen numerous unprovoked executions of civilians.
The UN secretary general Antonio Guterres said:
‘I am deeply shocked by the images of civilians killed in Bucha, Ukraine. It is essential that an independent investigation leads to effective accountability.’
Russia has disputed the allegations, stating that Ukraine has spread ‘deliberately false information’ in order to undermine peace negotiations. The Kremlin is seeking a UN security council meeting on the matter.
Euro (EUR) Tumbles as German Bank Heads Warn of Recession
The Euro (EUR) is sliding against its rivals today. Reduced hopes for a diplomatic solution between Russia and Ukraine are limiting bets on the single currency today. Fears of a German recession as a result of the conflict are also likely weighing on EUR.
Christian Sewing, chief executive of Deutsche Bank, stated that German banks expected growth to slow sharply in 2022. Germany’s reliance on Russian energy supplies have led to concerns of widespread economic disruption.
Speaking to journalists today, Sewing said:
‘The situation would be even worse if imports or supplies of Russian oil and natural gas were to be halted. A significant recession in Germany would then be virtually unavoidable.’
Sewing also called for the European Central Bank (ECB) to act in order to curb soaring inflation. Expectations that the ECB may raise rates in 2022 may be preventing major losses for the single currency today. ECB President Christine Lagarde has previously said that she expects inflation to come down without intervention from the central bank.