EUR GBP Looks to Economic Data for a Recovery

The EURGBP exchange rate saw a strong 0.62% gain on Friday but that was from new lows on the week and does little to address the sell-off since November. The euro will look to PMI data this morning from the Eurozone and the UK to see how both economies are faring in the current environment of higher inflation.

The EUR to GBP rate was trading at 0.8368 and is looking to get above resistance at 0.8400 to start a new rally.

Putin’s grand strategic opportunity, Evans-Pritchard writes

Ambrose Evans-Pritchard, writing in the Daily Telegraph, has said that “markets seem not to believe that Europe is close to the largest military conflict since 1945”.

Intelligence gathered by Britain and the US says that Vladimir Putin plans to install a government in Kiev, similar to the Crimea situation in 2014.

For Europe to retaliate, as they have threatened, could risk a further gas price crisis, with recent reports that Germany only has around two weeks’ supply of gas. Over 30% of European supply comes from Russia via Ukraine.

European prices have halved since the panic spike just before Christmas, but prices remain elevated.

“Either investors are not paying attention to Ukraine, or they think that Mr Putin is engaged in a theatrical bluff to extract concessions, noisily deploying over 125,000 men at last count near the Ukrainian border, along with attack helicopters and the dispatch of Baltic amphibious assault ships to the Black Sea.”

The situation looms in the shadows and could rattle the euro if Putin was to make an advance on Ukraine. The Russian leader wanted assurances that Ukraine would not join Nato or the EU.

Restrictions gone, and maybe Boris Johnson

Boris Johnson announced a further easing of restrictions with the move to drop Plan B restrictions.

Face masks will no longer be mandatory, while the NHS passports will be dropped and work from home guidance shelved. The popular move will maybe be too late to save Boris Johnson as he awaits the Sue Gray report into the Downing Street drinks party that went ahead during a strict lockdown.

Boris Johnson has been urged to provide a full disclosure on the report, which could lead to a no confidence vote in the PM.

Meanwhile, the European and British economies will see PMI data released on Monday, with markets expecting a jump from 53.6 to 55 in the UK. In Europe, expectations are for a slip to 52.6 from 53.3. The German economy is expected to also dip to 49.2, from 49.9, which is below the expansionary 50 indicator.

The data will set the tone for the pair in the week ahead and Tuesday will bring German IFO business climate data. Market eyes will also be on the Federal Reserve meeting on Wednesday, where the central bank could raise interest rates to tackle the 7% inflation seen in the country. That would be a green light for other economies to follow but could hit stock markets as stimulus is being removed.

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