Our quick currency update: MARCH 2022
Russia’s invasion of Ukraine has upended currency markets over the past month.
Unsurprisingly the euro has proven particularly sensitive to the outbreak of war in
Eastern Europe, with EUR exchange rates hitting multi-year lows as a result of fears
over European security, before rebounding amid hopes for a negotiated end to the
The pound has also been sensitive to the situation in Ukraine, albeit not to the same
extend as the euro, with GBP investors particularly concerned about the potential for
the conflict to fan inflationary pressures and exacerbate the UK’s cost of living crisis.
Conversely the US dollar benefited from considerable safe-haven flows since the
outbreak of the war, while another sharp increase in US inflation has also helped to
bolster USD exchange rates.
Looking ahead, so long as the conflict in Ukraine continues to dominate headlines its
likely movement in the FX market will remain erratic.
Elsewhere, with the Bank of England (BoE) set to adopt a more cautious approach to
monetary policy the pound is likely to suffer, while expectations for up to six more rate
hikes from the Federal Reserve this year could help to underpin the US dollar.
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