Pound US Dollar (GBP/USD) Exchange Rate Plummets as Russian Invasion Begins
The Pound US Dollar (GBP/USD) exchange rate nosedived today following the deployment of Russian troops across the Ukrainian border. The Pound has fallen to its lowest level for February as investors flock to safe-haven currencies.
At time of writing the GBP/USD exchange rate is at around $1.3389, which is roughly -1.2% down from this morning’s figures.
US Dollar (USD) Rockets as Biden Condemns Russian Attack
The US Dollar soared today as investors flocked to the safe-haven ‘Greenback’. Global risk appetite has quickly retreated following Russia’s invasion of Ukraine.
Reports indicated that Russian forces crossed the Ukrainian border at multiple points around dawn. The Ukrainian interior ministry reported attacks from cruise and ballistic missiles targeting infrastructure near major cities. Locals in the capital city of Kyiv have sought refuge in bomb shelters for the first time since 1941.
US President Joe Biden said:
‘Russia alone is responsible for the death and destruction this attack will bring, and the United States and its allies and partners will respond in a united and decisive way.’
The US, UK, and EU have all announced their own packages of economic sanctions targeting Russia. The major Western powers are expected to announce further measures in the coming days.
Gains for USD may be capped by a fall in US Treasury bond yields however. Geopolitical uncertainty has likely also pared back investor expectations of an aggressive rate hike by the US Federal Reserve. USD has likely seen fewer speculative bets as a result.
Pound (GBP) Falls as BoE Signals Dovish Turn
The Pound (GBP) tumbled against the majority of its rivals today amid a risk-off trading mood. The deployment of Russian troops into Ukraine has sent shockwaves throughout the markets.
UK Prime Minister Boris Johnson has called the invasion ‘a catastrophe for our continent’ ahead of an address to the nation. Johnson came under criticism this week after the UK’s revealed sanctions against Russia were weaker than anticipated.
A series of dovish comments from Bank of England (BoE) officials on Wednesday may also limit gains for Sterling. Multiple members of the central bank’s Monetary Policy Committee (MPC) called for a ‘measured’ approach to controlling inflation. These comments seem to contradict the previously hawkish stance taken by the BoE and has led to accusations of poor communication.