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Monday, August 15, 2022

GBP/USD is bleeding out towards the lows of the day as Ukraine crisis weighs

  • GBP/USD slides in midday Asia as markets stay in risk-off mode.
  • The Ukraine crisis is in the driving seat while traders await key MPC speakers.

GBP/USD is under pressure at 1.3585 after ranging from a high of 1.3601 to a low of 1.3580. The markets are focussed on the latest moves from the Kremlin with the Russian president, Vladimir Putin, who on Monday signed a decree that recognises Donetsk and Luhansk in Eastern Ukraine as independent states.

Additionally, Putin ordered troops to move into the region on a peacemaking patrol. The US expects Russian troops could move into the Donbas region of Ukraine as soon as Monday evening or Tuesday eastern time. In response to the Kremlin’s actions today, the West is promising to respond with sanctions.

The US President Joe Biden has already signed an executive order Monday imposing sanctions that target two Russia-backed breakaway republics in eastern Ukraine. Meanwhile, the UK confirmed it will be announcing Russia sanctions tomorrow in response to Putin’s declaration. The Guardian also reported that the UK government said sanctions are expected to go further if invasion happens, so they won’t go as far as full package prepared yet.

MPC speakers eyed

Meanwhile, for the week ahead, there will be both BoE and Fed speakers. ”With 6 speakers scheduled, the MPC will have plenty of opportunities to push back on aggressive market pricing ahead of its March meeting,” analysts at TD Securities explained.

”While markets are betting on a 50bps hike, we think the MPC is more likely to stick to 25bps increments. Wed is TSC, and Thurs/Fri sees 3 MPC members speak at the BoE’s “Unwinding QE” conference, which could provide early hints on QT plans.”

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