Pound US Dollar Exchange Rate News: GBP/USD Falls as Ukraine Crisis Battles On

March 4, 2022 - Written by John Cameron

STORY LINK Pound US Dollar Exchange Rate News: GBP/USD Falls as Ukraine Crisis Battles On

GBP/USD Drops as Russia-Ukraine War Escalates

The Pound US Dollar (GBP/USD) exchange rate is losing ground this morning as the situation in Ukraine continues to deteriorate.

At the time of writing, the GBP/USD exchange rate is trading at approximately $1.3317, down roughly 0.3% from today’s opening levels.

US Dollar (USD) Climbs as ‘Europe Must Wake Up’

The US Dollar (USD) is trending higher against the Pound (GBP) today as geopolitical uncertainty underpins the safe haven currency.

News of Russian shelling causing a fire to break out at Ukraine’s Zaporizhzhia nuclear power sparked a risk off market mood.

Ukraine’s President, Volodymry Zelenskiy, said:

‘Europe must wake up now.

‘If there will be an explosion, it will be the end to all of us: the end of Europe, the evacuation of Europe.

‘Only immediate action of Europe can stop Russian troops and prevent the death of Europe from the disaster at a nuclear station.’

At present, there are no change in radiation levels at the plant which is helping to calm market jitters and is capping the US Dollar’s gains.

Pound (GBP) Faces Headwinds Amid Russia-Ukraine War

The Pound (GBP) is on the back foot at the beginning of today’s session as the Ukraine crisis dominates headlines.

As the Ukraine crisis escalates, it is likely to bolster inflationary pressures in UK as energy supply concerns have propelled oil and gas prices sharply higher.

The jump in prices at the pump is a major concern for GBP investors, amidst fears it could exacerbate the UK’s cost-of-living crisis and stifle economic activity.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said:

‘Already petrol and diesel have hit fresh highs at the pumps causing yet more pain for consumers already caught in the grip of the cost of living crisis.

‘The extra pounds on bills are piling up for hard hit families, with the increase in fuel, energy and grocery bills set to hit lower income households harder as a higher proportion of their outgoings will be spent on travel costs.’

Further weighing on the Pound’s appeal are easing expectation for a March interest rate hike from the Bank of England (BoE).

This follows a broadly dovish consensus from BoE policymakers who spoke throughout the week.

GBP/USD Exchange Rate Forecast: Ukraine Crisis to Maintain Spotlight

Looking ahead, the Russia-Ukraine war may continue to infuse volatility into the Pound US Dollar exchange rate.

On the data front, the US Dollar may be buoyed by this afternoon’s publication of non-farm payrolls for February.

The figures are predicted to show the US workforce expanded by an additional 400k last month. Though down from the January’s 467K, it could still stoke Federal Reserve rate hike expectations and buoy the US Dollar in the process.

Meanwhile, the US unemployment rate for February is expected to slip from 4% to 3.9% further underpinning demand for the ‘Greenback’.

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