Pound Euro Exchange Rate News: GBP/EUR Climbs Above €1.21 amid Escalating Ukraine Crisis

March 4, 2022 - Written by John Cameron

STORY LINK Pound Euro Exchange Rate News: GBP/EUR Climbs Above €1.21 amid Escalating Ukraine Crisis

GBP/EUR Bolstered as Russia-Ukraine War Escalates

The Pound Euro (GBP/EUR) exchange rate is climbing during today’s session amidst ongoing uncertainty surrounding the current Ukraine crisis.

At the time of writing, the GBP/EUR exchange rate is trading at approximately $1.2101, roughly up by 0.3% from today’s opening levels.

Euro (EUR) Extends Losses as Ukraine Crisis Spooks EUR Investors

The Euro (EUR) is trending lower against the Pound (GBP) again today as the situation in Ukraine continues to enact a heavy toll on EUR sentiment.

This morning, it was reported Russian troops shelled the Ukraine’s largest nuclear power station, Zaporizhzhia, prompting a fire to break out at the complex overnight.

The threat of a nuclear accident has underpinned the threat the war poses to European security and reinforced the EUR selling bias this morning.

Moreover, as the war battles forward, expectations for a European Central Bank (ECB) rate hike in the near-term continue to ease, further undermining the Euro.

The figures showed the smallest trade surplus since December 2000, printing at €3.5 billion, and falling dramatically short of market forecast for a surplus of €9.2 billion.

These figures are a worrying sign for Germany’s export driven economy and is placing additional pressure on the Euro this morning.

Moreover, the Eurozone’s retail sales for January have also missed forecasts. While sales growth rebounded from –2.75 to 0.2% this was significantly below expectations of a 1.3% expansion.

Pound (GBP) Buoyed Despite Ukraine Crisis

The Pound (GBP) is on the back foot against many of its peers today, though rising against a weakened Euro (EUR).

As the war between Russia and Ukraine escalates, global oil prices have struck new multi-year highs, stoking concerns over further inflationary pressures in the UK.

This will no doubt deepen the cost-of-living crisis that Britons are already contending with, fears over which are limiting the upside potential of the Pound today.

Senior Tory MP Tom Tugenhdat, chair of the Foreign Affairs Committee, recently said:

‘The decisions made around Europe are absolutely going to shape the way Vladimir Putin sees this because the reality is that if we leave this to stand, if we let this pass, you can forget about petrol at £1.70 a litre, which is where it’s heading now. It will be significantly higher.

‘This is absolutely one of those moments where we’re going to see the cost-of-living crisis driven by war.’

Furthermore, throughout this week’s session, numerous Bank of England (BoE) policymakers have delivered broadly dovish speeches.

In turn, this has dampened rate hike bets at BoE’s March meeting and capping GBP’s gains against EUR today.

GBP/EUR Exchange Rate Forecast: Ukraine Crisis to Keep Hold of Limelight

For the foreseeable future, it’s likely that the Russia-Ukraine war will continue to be the main stimulus for the Pound Euro exchange rate.

Today, the UK’s foreign minister, Liz Truss, and her European counterparts are meeting in Brussels to discuss the current position of the West against Vladimir Putin’s actions. Newfound optimism may buoy both Sterling and the single currency, should a diplomatic solution be found.

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