In worrying times like this, it is important for us to point out that we completely acknowledge the wider implications of international conflict. Our principle duty as a company is to ensure that our clients are aware of all of the factors that affect currency exchange rates, which sadly sometimes includes war. Our thoughts are with everyone who is being affected by this escalating situation, and our currency updates do not intend to diminish, ignore or undermine the true impacts of this conflict.


Russia has invaded Ukraine in the early hours of the morning as markets are convulsing following the news. Ukraine’s foreign minister Dmytro Kuleba condemned the invasion as a “war of aggression” and called the world to stop Putin, saying “the time to act is now.” US president Biden denounced the attack while a UK foreign office minister promised that the UK will impose “unprecedented” sanctions to punish Russia’s “appalling decision” to invade Ukraine.

Outlook for the pound

The outlook for the GBP/USD pair remains mixed but analysts have noted that the pair will trade within a stable range in the next few weeks. GBP has a higher correlation with risk, but so far, it has managed to hold up and is slightly lower against the US dollar.

Financial analysts have also highlighted how the pound tends to rally alongside such safe-havens as the yen and franc during times of Ukraine-centric tensions and falls alongside these currencies when tensions recede.

Early on Thursday morning, GBP/USD dropped to a near four-week low as traders turned to the safe-haven US dollar, following Russia’s invasion of Ukraine, but managed to recover some of its losses soon after.

Invasion of Ukraine

Investors are on the edge after Russian President Vladmir Putin ordered a “special military operation” at dawn and reports show that there are explosions all over the country, near major Ukrainian cities, including the capital Kyiv. World leaders have warned that this could become the biggest war in Europe since 1945.

Markets’ reaction

The invasion of Ukraine has created uncertainty as markets are in turmoil, with the safe-haven US dollar and Japanese yen gaining ground alongside gold and oil. Stocks and risk currencies are dropping fast.

US president Joe Biden said that the United States and its allies will impose “severe sanctions” on Russia.

The rouble hit a record low of 89.60 against the dollar, and the Moscow stock exchange is temporarily suspended, but will reopen at 10am GMT. Russian sovereign dollar bonds are selling off.

Sterling has been considered a relative safe haven amidst Ukraine-Russia risks and this can be seen by the higher pound to euro exchange rate.

Markets are now considering severe sanctions with the most serious being the sanction against Russia that would involve banning Russian crude and gas from international markets. This will affect economies battling high inflation.

The pound will continue to struggle as the war in Ukraine continues and drives demand for the safe-haven US dollar.

Putin’s warning

In his televised address at 5am, Putin claimed “A hostile anti-Russia is being created on our historic lands.” For this reason, he explained, “We have taken the decision to conduct a special military operation,” focused on the “demilitarisation and denazification” of Ukraine. “We do not intend to occupy Ukraine,” he said and sent a warning to other nations: “To anyone who would consider interfering from the outside: if you do, you will face consequences greater than any you have faced in history. All relevant decisions have been taken. I hope you hear me.”

Thursday’s attack was preceded by a large-scale continuous cyber-attack that targeted Ukraine’s ministries and banks to create confusion.