Russia threatening EU states with restrictions on gas supply

EUR

The euro came under renewed pressure yesterday, as Russia cut gas supplies to Poland and Bulgaria. The threat from Russia of further restrictions on gas prompted five year lows for the euro against the US dollar and a reversal of gains against the pound.

Russia signalled that its decision to halt gas supplies to Poland and Bulgaria was due to a refusal from the European countries to pay in rubles. However the bloc along with its allies, see the move as a weaponisation of energy supply. With only two countries currently being targeted, the threat of further restrictions will weigh in on the euro in the short term.

GBP

GBP/USD took another hit yesterday as investors weigh in on rising geopolitical tensions. Cable traded at yearly lows and is fast approaching the two year low this morning.

A storm of poor UK economic data and demand for safe-haven flow have seen the pair GBP/USD decline for a fifth day in a row. With the Bank of England uncertain about their monetary policy plan for the rest of the year and the Federal Reserve almost guaranteed to raise rates in may, the outlook on cable is not positive.

Key announcements

12:30 – USD – GDP Q1 (previous 6.9 vs consensus 1.1)