Recession Builds in Europe
The GBP/USD currency pair keeps suffering vulnerabilities from a couple of trading sessions now as the war between Russia and Ukraine is creating a situational recession in Europe. The pair looks to have printed a new one-year low as the market traders and other investors are disinvesting from and dropping European currencies as they expect a stagnant inflation situation to take deep roots any moment going forward.
GBP/USD price chart. Source TradingView
The economic condition is getting worse as it is following the United States confirmed that it would ban oil importation from Russia into the country and for use by associated businesses. It is easier for the United States to boycott oil importation from Russia since it meets most of its domestic usage of oil locally. The case is, however, different for countries in Europe who depend more on importing oil from Russia to meet their domestic needs. There is going to be an unbearable struggle if they were to go with the United States decision.
In the meantime, there was a poor performance in the British Retail Consortium’s retail sales which has made the situation worse than it should have been. The printed figures came in at 2.7%, a position far lower than the market speculation and the former figures at 15.2% and 8.1% respectively.
US Data Still on the Rise
The US dollar index is currently moving between the ranges of 98.67 to 99.42 while investors are expecting the publication of the Consumer Price Index figures for the United States, which are said to be due for publication on Thursday.
It is a generally known fact that data regarding the United States inflation will have a significant influence on the monetary policy decision of the Federal Reserve. Moreover, the ten-year American Treasury bond yields have shot up close to 1.86% on increasing expectations of a hawkish interest rate increase by the Federal Reserve.
There are a plethora of events for the United Kingdom this week which include the Gross Domestic Product data release, Manufacturing Production, and Industrial Production data due to be released on Friday.
During the Tuesday trading session, there was an early reversal of losses for the GBP/USD pair from a drop it slid into in the first half of the European session. The drop was below 1.3100 the zones which are the lowest since November 2020, but it later picked back up to the day’s high. The pair later got to trade in the 1.3125 zones, near 0.20% on the day.