Pound Euro Exchange Rate News: GBP/EUR Slips as Russian Invasion Fears Ease

Modified: Tuesday, 15 February 2022 12:05 BST - Written by John Cameron

STORY LINK Pound Euro Exchange Rate News: GBP/EUR Slips as Russian Invasion Fears Ease

GBP/EUR Stumbles as Geopolitical Anxieties Ease

The Pound Euro (GBP/EUR) exchange rate is edging down today as the Russia-Ukraine concerns ease, reducing the fears of a war out breaking on the EU border.

At the time of writing, the GBP/EUR exchange rate is trading at approximately €1.1943, roughly down by 0.2% from today’s opening levels.

Euro (EUR) Bolstered by Eased Geopolitical Concerns

The Euro (EUR) is trading higher against the Pound (GBP) as concerns of a Russian invasion ease.

Russia is reportedly withdrawing some troops from the Ukraine border. This is alleviating fears of a war on the EU’s border and bolstering the single currency.

Russian defence ministry spokesman, Igor Konoshenkov, stated that ‘units of the Southern and Western Military Districts, which have accomplished their missions, are boarding trains and trucks and will head for their garrisons later today.’

UK Foreign Secretary Liz Truss said:

‘The Russians have claimed that they have no plans for an invasion, but we will need to see a full scale removal of troops to show that is true.’

Furthermore, EUR exchange rates have been buoyed by the release of Germany’s economic sentiment index for February.

Germany’s figures printed at 54.3. This is the highest reading since July 2021, up from January’s 51.7 but narrowly missing market forecasts it would print as high as 55.

In addition, the Eurozone’s GDP growth rate’s second estimation for the fourth quarter printed at 0.3% as expected, whilst the employment figures for the fourth quarter showed employment growth slowed from 0.9% to 0.5%. This is capping the Euro’s upside potential this morning.

Pound (GBP) Loses Ground Despite Upbeat Employment Data

The Pound (GBP) is subdued against the Euro (EUR) this morning in spite of positive employment figures for the UK.

December’s average earnings increased from 4.2% to 4.3%, significantly higher than the expected 3.8%. Meanwhile, December’s unemployment rate remained unchanged at 4.1%.

However, despite the positive figures, UK wages are still behind the current rate of inflation which is renewing cost-of-living concerns.

The Office for National Statistics said:

‘In real terms (adjusted for inflation), total and regular pay fell on the year at negative 0.1% for total pay and negative 0.8% for regular pay.

‘Previous months’ strong growth rates were affected upwards by base and compositional effects. These temporary factors have largely worked their way out of the latest growth rates, however, a small amount of base effect for certain sectors may still be present.’

GBP/EUR Exchange Rate Forecast: Will UK’s Inflation Reading Buoy GBP?

Tomorrow, the UK’s inflation reading for January may buoy the Pound Euro exchange rate.

Presently, the reading is forecast to remain unchanged at 5.4%. Will this cause a bearish attitude and weigh on the Pound’s demand?

Moreover, the UK’s retail sales for January is expected to report sales growth rebounded from a 3.7% contraction to print at 1% which may bolster Sterling’s appeal.

On the other hand, the Euro is likely to be influenced by a variety of speeches from European Central Bank (ECB) policymakers, as well as the contents of the ECB’s non-monetary policy meeting.

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