GBP suffers as Crimea issue continues

With the Russian President, Vladimir Putin, signing the annexation of Crimea into effect and welcoming the contested area into the Russian Federation fold, the UK’s Sterling took a knock with traders jittery and in search of safe-havens like the US dollar. Putin’s comments later on in the day that his intent is not to splinter the Ukraine (which would be in his favour to do) to then result in conflict did pacify markets a little. That being said, Ukraine’s overwhelmed army did however suffer its first casualty with a soldier being killed by unknown forces which will surely heighten tensions within the region. Domestically, the UK’s MPC appointed a new deputy governor and head of markets and banking in a bid to review how the Bank of England conducts market intelligence following recent criticisms over market manipulation. All eyes are on Chancellor, George Osborne, today who will release his budget report just after midday which has obvious, wide-ranging implications for the United Kingdom as we head deeper into 2014.

In Europe, weak German ZEW, which reflect economic activity, was shown to be down in March. This, coupled with the issues that Ukraine is posing for Europe, socially, politically and economically, knocked EUR. Pundits will be waiting to hear what the President of the European Council, Herman Von Rompuy, has to say at the European Council meeting on Friday where forward guidance of the struggling economy will be discussed.

With the US dollar, the Greenback is being seen as something of a safe-haven following Russia’s intervention in the Ukraine which the States has deemed to be illegal. The dollar may be under pressure today as this afternoon we see the FOMC meet where the Fed is looking to reduce the jobless rate threshold with a decision to raise interest rates or not. They are also expected to discuss another $10Bn taper and introduce a ‘qualitative approach’ to monetary policy.