Pound Slips as Retail Sector Continues to Suffer, Euro Nosedives as Russia Halts Gas Shipments

Pound (GBP) Drops amid UK Retail Sector Woes

Whilst the Pound (GBP) reclaimed some lost ground today, it largely fell against its rivals amid a pessimistic outlook for the UK’s economy. Figures from the Confederation of British Industry (CBI) indicating a further downturn in the UK’s retail sector likely added to these woes today, pulling Sterling lower.

A cautious tone from the Bank of England (BoE) may have also weighed upon GBP today. Traders have reigned in their bets of a more aggressive rate hike after the central bank softened their language in recent weeks.

Looking to the rest of the week for the Pound, investors will be keenly awaiting a speech from BoE Governor Andrew Bailey on Thursday for indicators of the central bank’s direction.

Euro (EUR) Tumbles as Russia Halts Gas Deliveries

The Euro (EUR) plummeted against many of its rivals and hit its lowest level against the US Dollar (USD) since March 2017. The single currency struggled amid increased geopolitical pressures off the back of the Ukraine-Russia conflict. Russia announced this morning that they would be halting gas deliveries to Bulgaria and Poland in response to Western sanctions.

The move was widely denounced by European leaders as ‘blackmail’. Moscow on the other hand insisted it was simply to ensure that gas payments were made in roubles. Despite reports later in the day that some European suppliers had caved to the demands, the news continued to push EUR lower.

Looking ahead, a report from the European Central Bank (ECB) on Thursday could bolster hawkish bets on a 2022 rate hike from the central bank. Forecast positive GDP growth figures and an expected uptick to Eurozone inflation could also bolster the single currency.

US Dollar (USD) Climbs amid Risk-Averse Mood

The US Dollar (USD) continued to soar today as investors flocked to the safe-haven ‘Greenback’. Fears over widespread lockdowns in China amid a surge in Covid-19 cases continued to prompt a risk-averse market mood. Tensions between the EU and Russia over sanctions and accusations of energy ‘blackmail’ have also seen global risk appetite continue to retreat.

USD was also supported by a continued hawkish tone from the Federal Reserve. Markets have all but locked-in an aggressive rate hike from the Fed at their May meeting. Speaking last week, Chair Jerome Powell signalled that a 0.5% rate hike was ‘on the table’.

Looking to the coming week for USD, a forecast sharp decline in GDP growth on Thursday could pull the currency lower. Further signals from Fed over potential aggressive rate hikes could continue to bolster the US Dollar however.

Australian Dollar (AUD) Dips Despite Inflation Rise

The Australian Dollar (AUD) dipped amid risk-off trading today. Higher-than-forecast inflation figures for the first quarter of 2022 helped the ‘Aussie’ to make some gains this morning. The figures may have helped to prevent more substantial losses for the currency amid speculation of an interest rate hike from the Reserve Bank of Australia (RBA).

A forecast rise to PPI figures on Friday could further increase bets on the RBA if figures print as forecast.

Canadian Dollar (CAD) Falls as Oil Prices Slide

The Canadian Dollar (CAD) struggled against many of its rivals today. The commodity-tied ‘Loonie’ found itself under pressure amid a dip in oil prices. A strong US Dollar (USD) has increased the cost of the commodity. Additionally, plans in Germany to limit the use of Russian oil and fears of lockdowns in China sparked demand fears over crude.

Looking ahead, a forecast rise in February’s GDP figures could push CAD higher. Further fluctuations in the price of oil could also drive movement in the currency.