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The Pound US Dollar (GBP/USD) exchange rate is falling today as geopolitical tensions fuel risk-aversion. 

The GBP/USD exchange rate is currently trading at around $1.3155, down about 0.5 percent from today’s opening levels. 

The US Dollar (USD) is rising against the Pound (GBP) today as a result of risk-off sentiment fueled by the Russia-Ukraine conflict. 

As the United States and the European Union reportedly consider banning Russian oil imports, investors are fleeing to safe-haven currencies, fearful of an increase in energy prices. 

The value of the US dollar (USD) is skyrocketing as investors seek safe haven currencies. 

Breaking ties with Russia, according to Bank of America chief economist Ethan Harris, would be a “major shock to global markets” and would cause energy prices to skyrocket.

Russia is the world’s second largest oil exporter. As a result, the pursuit of alternative energy sources has the potential to disrupt energy supplies. 

The vast majority of commodities, including oil, have risen significantly in recent days. WTI crude oil is currently trading at $117.31 per barrel, up 1.29 percent, and is expected to rise further. 

Furthermore, the ‘Greenback’ is still reeling from last week’s hawkish speech by Federal Reserve Chair Jerome Powell. 

Powell stated that he would be “inclined to support” a rate hike at the Fed’s March meeting, boosting USD demand even more. 

Today, the Pound (GBP) is losing ground against the US Dollar (USD) as Russia advances further into Ukraine.

Because of the uncertainty surrounding future energy supplies and the impact it may have on the UK’s current cost-of-living crisis, geopolitical anxiety is dampening GBP sentiment. 

If the cost-of-living crisis worsens, rate hike bets are likely to fall and Sterling’s appeal will suffer even more. 

Although the UK government is distributing £20 billion in support to society’s most vulnerable over the next fiscal year in an effort to alleviate the cost-of-living crisis, it is argued that this is insufficient to resolve the crisis quickly. 

Further weighed down by a lack of data, Sterling is vulnerable to market movement today, causing the Pound US Dollar exchange rate to collapse. 

Geopolitical developments will continue to be the primary driver of movement in the Pound US dollar exchange rate for the foreseeable future. 

If the United States and the European Union ban Russian oil, it may boost demand for the US dollar. 

On the data front, the ‘Greenback’ may be weighed tomorrow based on trade data. 

The trade balance is expected to fall from -$80.7 billion to -$87.1 billion in January, while exports are expected to fall from $228.1 billion to $225 billion. 

The Pound, on the other hand, is likely to be influenced by geopolitical developments due to a lack of significant data until the end of the week.