By Matthew Vassallo
The global markets have shown further signs of tension following comments made yesterday by deputy secretary-general of NATO, Mircea Geoana. His grim prediction that Russia’s current siege on Ukraine could likely last for years, reaffirmed the recent opinions of various key state figureheads, and led to an immediate sell-off of longer term bond yields in the commodities market.
This was followed by a drop in global share prices, and yet a further contraction in an already strained marketplace.
With the global financial markets seemingly becoming increasingly concerned by the longer-term impact of the war in Ukraine, it has been no surprise to see the USD make significant gains against both GBP & EUR of late, reaching 6-month & 5-year highs respectively.
Whilst the greenback historically holds its value better than the majority of other currencies during prolonged periods of global economic stagnation, it is still reliant, at least to some extent, on US economic stability to flourish unchallenged.
This is certainly not the case at present with the US releasing their latest Q1 GDP results, with the figures coming out below even the most conservative early year growth predications. The underwhelming results and dovish outlooks for Q2 has heaped further pressure on President Biden, who along with other leading Democrats in both the House of Representatives and Senate, are looking ahead to the upcoming US mid-term elections with an ever increasing grimace.
Switching our focus to the UK, and GBP has remained relatively docile over recent days, ahead of some key economic data releases next week.
The Pound held its early week position against the EUR, seemingly curbing any further significant downturn against the single currency for the time being. This is true despite UK PM Boris Johnson once again hitting the headlines for a plethora of wrong reasons over recent days.
Mr Johnson continues to entrench himself in the mire, with our increasingly polarised leader seemingly leaping from one disaster to another… but still he remains.
The actions of a shrewd, canny operator I wonder? Or those of a clueless, fumbling fussbudget?
Time will tell.