Good afternoon,

The pound staged a broad recovery across the board yesterday, making another push at the contested 1.20 pound to euro area.

Market participants flipped optimistic on news of a possible ceasefire in the Russia-Ukraine situation. As a pro-risk asset, GBP is highly sensitive to changes in global risk sentiment.

The move to the upside was mirrored by an increase in UK government bond yields. These took a heavy hit earlier in the week, as they reacted to adjustments in expectations of central bank interest rate hikes.

As mentioned in yesterday’s update, the geopolitical tensions have caused uncertainty in these projections. Analysts do point out that the pound should stay firmly supported as long as the view that the Bank of England will raise rates faster and higher than their European counterpart remains prevalent.

In other news, EURUSD continues to push down off the back of a strong dollar, having now breached the 1.11 level.

Have a great day.

Thomas De Caluwé, Relationship Manager.

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