GBP/USD: At risk of falling back below 1.34 if sanctions start affecting the flow of Russian gas – ING

GBP/USD stays relatively quiet above 1.3400. However, downside risks persist as the focus will be on whether sanctions/retaliation will start impacting the commodity flows from Russia, economists at ING report.

Sterling still vulnerable

“The pound is set to remain highly sensitive to any news regarding a possible curb in gas flows from Russia and more spikes in gas prices, although a somewhat reduced volatility is allowing some tentative stabilisation around the 1.3400 mark in GBP/USD since yesterday. Still, we continue to see a clear prevalence of downside risks for the pair.”

“As eurozone CPI numbers could provide some support to the euro today and tomorrow, EUR/GBP could inch higher towards the 0.8400 level it briefly touched last week.”