Sterling slips vs dollar, bounces off 3-month low against the euro

Sterling slipped versus the dollar in early Thursday trading, pulled lower by a general drop in riskier currencies as investors worry about uncertainty over the war in Ukraine.

Ukrainian forces are preparing for new Russian attacks in the east of the country as Moscow deploys more troops there after suffering setbacks near the capital Kyiv — making it clear that while Russia may have scaled back its immediate ambitions, the conflict may still intensify.

In the absence of any major economic or policy news, the pound has drifted in recent sessions against the dollar. By 0935 GMT, sterling weakened 0.1% to $1.3124.

Versus the euro it rose slightly to 84.8 pence, reversing some of the recent weakness that saw the British currency hit a three-month low in Asian trading hours.

The euro has rebounded in recent sessions against most currencies after a bruising month, as investors become a bit less concerned about the hit from the war in Ukraine on the euro zone economy.

“It’s all very quiet in the UK today, both on the data side and in terms of Bank of England communication,” said ING analysts in a research note.

“We see mostly downside risks from this point for the pair, but that should be a story for the coming weeks, as the euro’s good momentum could keep a floor under the pair for now.”