Excel Currencies Blog

An end to the Russia-Ukraine war would of course be welcome news across the globe, but what would it do to financial markets?

GBP v USD was trading at 1.35 mid-market when Russia invaded Ukraine on February 2022. This level hasn't been seen since, with the war a major variable as to why.

Geopolitical risk means investors and traders flock to safe-haven currencies for protection and the USD is the most traded currency by a gigantic margin (this increases the value in the Dollar as more of it is owned).

A cease fire or an end to the war would therefore penalize the Dollar.

The Pound is seen as more of a safe-haven versus the Euro when it comes to this particular war, mainly because of location, but also the trade the EU relies on with Ukraine & previously Russia (energy, wheat, microchips etc). There is no doubt that the war has suppressed the Euro.

A cease fire or an end to the war would therefore enhance the Euro.

Any positive or negative news on talks will impact the above currencies' value from here on out. Talks are due to be held next week, but what exactly the US/Trump can do/offer Russia remains to be seen. 

Elsewhere, US inflation has slightly ticked higher, lowering the chance of the beginning of a US interest rate cutting cycle (meaning a stronger overall USD).

UK GDP rose 0.1% in Q4 last year, beating the previous quarter of 0% and consensus of -0.1%. It's rather horrible to write these dismal figures, but this is the circumstance the UK currently finds itself in. Still, at least it was 'growth' and Sterling reacted positively to the news.