The US has placed approximately 8,500 troops on standby for possible deployment to central and eastern Europe to shore up NATO’s defences as western leaders pledged to form a united front against the threat of a Russian invasion of Ukraine. US Secretary of Defence Lloyd Austin issued the prepare to deploy orders at the direction of President Joe Biden, the latest step the US has taken to prepare for a potential Russian invasion of Ukraine that officials have warned could be imminent. Earlier on Monday the Biden administration was in in the final stages of identifying specific military units it wants to send to Eastern Europe, according to multiple US and defence officials. The goal of sending military reinforcements to Eastern Europe would be to provide deterrence and to reassure allies, and there’s been no suggestion US combat troops would deploy to Ukraine or take part in any combat roles. Kirby noted the US does have military advisers in Ukraine.
Boris Johnson’s premiership was plunged deeper into crisis on Monday after it emerged that he had a birthday party during England’s first lockdown in 2020, despite Covid rules at the time banning indoor social gatherings. Johnson has denied knowledge of parties in Downing Street, but he attended a get-together in the cabinet room to celebrate his birthday in June of that year, along with up to 30 guests. When the gathering took place pubs, restaurants, and non-essential shops were closed, while outdoor gatherings were limited to the rule of six. A member of the 1922 executive committee said the latest revelations were “fatal.” The account of the latest event comes as Sue Gray, a senior civil servant, finalises her report into alleged parties in Downing Street during Covid lockdowns. James Gray, a veteran Tory MP, said the party could rally around the prime minister in the event of a conflict in Ukraine, just as they had last week after Tory MP Christian Wakeford defected to Labour.
Sterling is well bid against most major currencies overnight. UK economic activity growth slowed to an 11-month low in January, as high numbers of coronavirus infections weighed down on consumer services. Boris Johnson repeatedly refused to say whether a £12bn national insurance hike would go ahead as planned in April, as pressure mounted on him from within his own party to put it on hold. Britain ordered several of its embassy staff and family members to leave Ukraine. The move came after the US ordered family members of its embassy staff to leave Kyiv because of the risk of “significant military action” by Russia. Britain’s government looks firmly on track to borrow less this tax year than forecast only two months ago but surging inflation will soon curb any leeway for finance minister Rishi Sunak ahead of his March budget update. Meanwhile, British companies have warned that their recovery from the pandemic risks being reversed by rising inflation as they grapple with the dilemma of determining what proportion of costs can be passed on to consumers.
Euro is weaker than most major currencies in the early morning trade. The first round of Italy’s presidential election yielded no winner as an agreement in the country’s divided parliament remains distant. Prime Minister Mario Draghi is seen as a favourite to be chosen head of state for the next seven years given his international reputation and pragmatic approach. But parties remain divided on who will lead the government in his place and electing Draghi would risk a return of political instability. Eurozone area annual inflation is expected to rise above 5.0 percent. The EU’s central bank, ECB, has been accused of “criminally neglecting the increasingly clear signs of a prolonged period of unacceptably higher and possibly self-reinforcing inflation.” Germany extended its current pandemic measures as the experts panel appointed by the government has warned the fast-spreading Omicron coronavirus variant could bring critical infrastructure in Europe’s biggest economy to a breaking point. Meanwhile, Norway replaces mandatory Covid quarantines for non-vaccinated travellers with a daily test regime.
The dollar is stronger against euro and weaker against sterling this morning. President Joe Biden was caught on a hot mic cursing a Fox News reporter at a White House event on Monday after the journalist shouted a question about the impact of rising inflation on this year’s congressional elections. A New York judge struck down the state’s mask mandate on Monday, one week before it was due to expire, ruling the governor overstepped her authority in imposing a rule that needed to have been passed by the state legislature. Gold prices were steady on Tuesday, as concerns about a faster pace of US Federal Reserve policy tightening countered safe-haven demand fuelled by escalating Ukraine tensions. The Fed is due to meet this week and will give a clearer picture of how quickly it will raise interest rates to tackle soaring inflation. Meanwhile, a US court rejected the Alabama legislature’s redrawn US congressional district map for November elections, saying it likely violated the Voting Rights Act and stood to deny Black voters an additional representative.
Ballinger & CO. Morning Report- 25th January 2022
GBP>EUR – 1.1944
GBP>USD – 1.3481
EUR>USD – 1.1286
GBP>CAD – 1.7032
GBP>AUD – 1.8854
GBP>SEK – 12.508
GBP>AED – 4.9508
GBP>HKD – 10.495
GBP>ZAR – 20.623
GBP>CHF – 1.2388
· 8:00 a.m.: U.K. Dec. public finances, public sector net borrowing
· 9:00 a.m.: Spain Dec. PPI
· 10:00 a.m.: Germany Jan. IFO business climate, expectations
· 12:00 p.m.: U.K. Jan. CBI business optimism, trends
· 2:00 p.m.: Hungary rate decision
· 3:00 p.m.: Belgium Jan. business confidence
· U.S. FOMC begins two-day meeting
· IMF launches the World Economic Outlook update
· EUR/USD Forecast: Sellers eye 1.1270 as euro stays below key resistance
· Conference Board Consumer Confidence January Preview: Inflation is a shock to the system
· German IFO Business Climate unexpectedly improves to 95.7 in January
· ‘Risk-off’ flight to the USD, JPY, CHF and gold on a Russia/Ukraine war starting – Rabobank
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