The slow response in the FX market when the bombs started falling earlier today puzzled but now we're seeing the kids of larger moves I anticipated.
GBP/USD is down 203 pips now to 1.3341 as the market frets about widespread sanctions reverberating back into Europe and hurting the growth and rate-hike outlook, which potentially causing stagflation due to soaring commodity prices.
Technically, the break through the January low opens up a deeper fall to the December lows, if not beyond.
It's tough to get our heads around all the fundamental permutations. I don't expect Russian oil and gas to be sanctioned but there will be massive inventory building in the year ahead now and there are so many uncertainties.
What tends to happen is the market will pile into what works and run from what is falling. That tends to lead to big movse and overshoots. It looks like GBP will be on the losing end of that equation.
