Germany ready to end Russian oil imports by end of the year


The pound remains stable but struggles to find direction. With very little optimism at the moment, Sterling will be limited to upside in the coming weeks. The first risk to consider stems from the rapid slowdown in economic output. For context, in January, the International Monetary Fund (IMF) expected UK Gross Domestic Product to expand by 4.7% in 2022 and by 2.3% in 2023. However, those projections are no longer valid. Now the IMF sees the UK economy growing by only 3.7% this year and a paltry 1.2% next year.

Furthermore, the ongoing war in Ukraine is also keeping Sterling capped against the US dollar. The deteriorating outlook for activity is perhaps one reason why traders aren’t pricing in more aggressive monetary normalisation despite inflation standing at 7%, its highest level in thirty years. The market now sees the Bank of England only placing a 40 basis points rise over the next three months.


The EU is moving towards a future ban on Russian oil according to the bloc’s two most senior finance ministers, an outcome which could provide sizeable downside risks to the euro. If this ban was to occur the currency will lose out further and the US dollar could benefit massively.

The economic shock from a ban on Russian oil is increasingly likely after German Foreign Minister Annalena Baerbock said on Wednesday that Germany was to end oil imports from Russia by the end of 2022. Baerbock’s comments followed those of German Finance Minister Christina Lindner who said her country can end dependency on Russian coal and oil faster than gas. She said a ban would recognise it is crucial to hurt Russian President Vladimir Putin’s war chest “more than ourselves”. As a result, Germany is standing ready for further sanctions on Russia. France could soon follow as French Prime Minster also supports this move. The euro is likely to remain under further pressure in the short term.

Key announcements

10:00 – EUR – Final CPI Y/Y – Set to remain unchanged at 7.5%
10:00 – EUR – Final Core CPI Y/Y – Set to remain unchanged at 3%
13:30 – USD – Philly FED Manufacturing – Forecast at 21.5 from previous 27.4
13:30 – USD – Unemployment claims – Forecast at 177k from previous 185k