Weekly Market Report: 14th – 18th February 2022

Friday 18th February -The Pound experienced a volatile day of trading as tensions between Russia and Ukraine grew. However, an increase in UK retail sales that were better than expected helped to boost the currency although the cost-of-living crisis increased fears that there would be a drop in sales in the coming months.

 

The Euro had a difficult day as the ongoing tensions between Russia and Ukraine increased concerns. Russian citizens were evacuated from parts of Ukraine which many believed to be a sign that a conflict was likely.

The US Dollar benefited from traders buying into the safe-haven currency at the end of the week, helping to strengthen it. Comments from the Federal Reserve also helped to bolster the Greenback as it stated that a rate hike in March was highly likely.

Thursday 17th February

The Pound firmed despite a disappointing report from the British Chambers of Commerce that looked at the post-Brexit trade deal that had been put in place. The unexpected rise in inflation also supported the currency while additional rate hikes are also expected.

The Euro dropped during the session as violence in Ukraine placed pressure on the single currency. Ukraine and Russia both made accusations of an attack, underpinning fears that Russia was ready to go to war.

The US Dollar was unable to take advantage of a risk-off market mood with investors holding back after the minutes from the Federal Open Market Committee failed to impress. Adding more pressure on the Greenback was news of an unexpected increase in US jobless claims.

Wednesday 16th February

The Pound made up lost ground as it took advantage of a rise in UK inflation which could indicate that the Bank of England could take an aggressive course of action. However, any gains were capped as the ongoing cost-of-living crisis held its grip, resulting in the currency to experience some volatility.

The Euro edged lower as the ongoing crisis between Russia and Ukraine remained a concern. Russia announced that it was withdrawing troops but Nato thought differently, claiming that Russian was strengthening its forces, all of which worked against the single currency.

It was a quiet day for the US Dollar as any movement relied on the release of the minutes from the Federal Open Market Committee meeting. Retail sales came in better-than-expected but that did not push the Greenback upwards, leaving it relatively subdued.

Tuesday 15th February

There was selling pressure on the Pound after the latest data release showed that inflation grew faster than the growth of wages during the fourth quarter of 2021. This meant that concerns around the cost-of-living crisis grew as fuel prices increased and the interest rate rise put household costs higher.

The Euro strengthened against many of its peers as tensions around the invasion of Ukraine by Russia eased, giving the single currency a boost. Vladimir Putin looked as though he was happy to engage in diplomacy as reports suggested that troops were being withdrawn, giving investors something to cheer about.

The US Dollar wobbled as it trended lower throughout the day as a result of an improved market mood which had a negative impact on the appeal of the currency. The PPI print came in better-than-expected and that saw the Greenback spike briefly although it soon lost these gains and slipped back.

Monday 14th February

A lack of clear UK data and a risk-off mood meant that the Pound experienced a volatile day of trading, leaving it exposed to losses. Despite this, the GDP data released on Friday helped to support the currency along with the Bank of England hike expectations, both of which helped to limit losses.

The Euro struggled as investors were concerned about the problems that could arise as a result of Russia invading Ukraine. If an invasion takes place then this would impact European stock markets, cause geopolitical issues and increase energy prices while banks would also suffer.

The US Dollar took advantage of a number of its rivals as a risk-off mood meant that the safe-haven currency was in demand. Any fears of an invasion of Ukraine were alleviated during the afternoon as Vladimir Putin was advised to continue with diplomacy and that is likely to have capped any gains.

Currency Ranges for the week:

GBP/USD: Low: 1.34906  High: 1.36374

GBP/EUR: Low: 1.19038  High: 1.20077

EUR/USD: Low: 1.12849  High: 1.13907

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