Russia requesting countries to pay gas supplies in roubles


The pound recovered for a second day and was up 0.85% on Thursday against the euro after trading through a narrow range during the course of the week. Sterling lost around 1% against the euro over the week but recovered yesterday after data released showed the UK economy rebounded faster than expected in the final three months of 2021.

GDP was 1.3% quarter on quarter as confirmed by the Office For National Statistics for Q4 which is a revision up from 1%. Although this was positive news, economic growth was still 0.1% below pre-pandemic levels.

Despite encouraging data helped to boost the pound in the opening session of yesterday, Sterling looks set to remain under pressure as the cost of living and record high inflation are expected to slow the UK’s GDP moving forward. The Bank of England will inevitably continue to raise interest rates.

Today’s market focus is on UK manufacturing PMI. It is expected to show a reading of 55.5, down from February reading of 58. This could invite more downward pressure on the pound, however a reading above 50 still supports growth in the sector.


The euro lost ground against the pound and US dollar yesterday as Ukraine-Russia peace talks continued but with little clarity of whether any progress had been made. Talks are set to continue today but so far there seems to be no breakthrough. Vladimir Putin has indicated that Russia could rip up contracts to supply gas to Europe unless “unfriendly” states drop their refusal to start paying for gas in roubles from Friday. “To buy Russian gas, they need to open rouble accounts in Russian banks,” Putin said in a televised appearance.

The G7 group of advanced economies – the US, UK, France, Germany, Italy, Japan and Canada – has so far refused to meet Russia’s demand for rouble payments and confirmed they will pay in USD and EUR as per their contracts. The impasse has already led to Germany and Austria making preparations for potential gas rationing, activating an emergency plan designed to help the countries cope with any disruption.

Today’s data for the eurozone will focus on inflation which is forecast to rise to 6.6% year on year in March, up from February’s 5.9%. Another high reading will likely raise the prospect of the European Central Bank’s need to raise interest rates sooner rather than later.

Key announcements

09:30 – GBP – UK Final Manufacturing PMI
09:30 – EUR – Eurozone PMI’s
10:00 – EUR – Euro CPI estimate
13:30 – USD – Non-Farm Payrolls
13:30 – USD – US unemployment rate
15:00 – USD – US ISM manufacturing PMI