Pound / Euro Rate Squashed amid Claims of Russian De-escalation in Ukraine

  • GBP/EUR back near to 1.18 as slide deepens
  • Amid claims of Russian military de-escalation 
  • With negotiations yielding tentative progress
  • But conflict continues & risks remain for EUR

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The Pound to Euro exchange rate slumped further on Tuesday as the European single currency rallied amid claims of a Russian military de-escalation in Ukraine and as another round of negotiations between the two sides came toward a conclusion in Turkey.

Sterling was already on the back foot against the Euro when the single currency rallied after deputy defence minister Alexander Fomin reportedly claimed that Russia will begin withdrawing its military forces from the region around Ukraine’s capital Kyiv.

Some reports suggested this is a gambit to foster progress in ongoing negotiations between the two sides, which continued in Turkey on Tuesday.

The official readout of a conference call between Russia’s defence minister Sergey Shoigu and leaders of the armed forces told a different story, however.

“The main tasks of the first stage of the operation have been completed. The combat potential of the Ukrainian Armed Forces has been significantly reduced, which makes it possible to focus the main attention and main efforts on achieving the main goal - the liberation of Donbass,” Defence Minister Shoigu said, according to the official readout of the Tuesday call between the defence ministry and armed forces. 

Above: Pound to Euro rate shown at 15-minute intervals alongside EUR/USD. Click image for closer inspection.

“Air supremacy has been won. The air force and the air defence system have been practically destroyed. Of the 152 aircraft that were in the Armed Forces of Ukraine before the start of the operation, 123 were destroyed, 77 out of 149 helicopters, 152 out of 180 long- and medium-range air defence systems. The naval forces of the country ceased to exist," the Russian defence minister also said.

Defence Minister Shoigu made clear on Tuesday that any withdrawal of troops from within the region around Kyiv would merely reflect the fact that the “the first stage” of the attack on Ukraine is complete, and does not necessarily signify that an end of the conflict is near.

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Ukraine’s Mykhailo Podolyak - an adviser to President Volodymyr Zelensky - said talks in Turkey had covered many subjects including the future status of Crimea and security guarantees potentially involving the U.S., UK, Turkey, France, Germany and others.

While negotiations were clearly making progress in relation to some of the most difficult issues in the discussions, Alexander Fomin's reported claims that changes in the stance of Russian armed forces were motivated by the talks are also clearly misleading.

Above: Pound to Euro rate shown at daily intervals with selected moving-averages and Fibonacci retracements of April 2021 uptrend indicating possible areas of technical support for Sterling. Click image for closer inspection.