LONDON, Feb 28 — Sterling rose against the euro but was little changed against the dollar today after Western nations imposed tough new sanctions on Russia for its invasion of Ukraine.

Western allies acted over the weekend to block certain Russian banks’ access to the SWIFT international payments system and announced plans to implement restrictions on the Russian central bank’s international reserves.

Against the euro, sterling was up 0.5 per cent at 83.64 pence at 1515 GMT as the single currency weakened following the sanctions.

Sterling recovered against the dollar to trade broadly unchanged at US$1.3419 (RM5.63) as ceasefire talks between Russian and Ukrainian officials began at the Belarussian border.

“GBP has been holding up surprisingly well — given that it is normally more sensitive to financial developments than others,” ING Global Head of Markets, Chris Turner told clients.

“Investors will be interested to see whether BP’s planned sale of its stake in Rosneft has any FX implications”, he added.

Energy company BP said it plans to exit its Russian oil and gas investments, the most aggressive move yet by a company in response to Moscow’s invasion of Ukraine.

The impact of the invasion on the Bank of England’s future path for interest rates continues to be a theme in the near-term.

Bank of America said they observed a concerted pushback on market rate hike pricing last week, with a majority of rate setters appearing to be against hiking in 50 basis point increments.

BoE policymakers Michael Saunders and Catherine Mann are scheduled to speak on Tuesday followed by speeches by Silvana Tenreyro and Jon Cunliffe on Wednesday, the latter on financial stability.

“Michael Saunders on Tuesday will be the key one to watch, as he voted for a 50bp hike and generally gives clear views,” Bank of America strategists said.

In the meantime, the British public’s expectations for inflation for the coming 12 months hit a record high of 5.6 per cent in February, according to a Citi/YouGov survey.

Separately, data showed today that business confidence in the UK rose by five points to a five-month high of 44, according to the Lloyds Business Barometer.

The survey of 1,200 companies also showed that 25 per cent of businesses planned to increase pay by 1 per cent-2 per cent over the next 12 months, while 23 per cent planned 2 per cent-3 per cent pay rises. The survey, however, was conducted during February 1-15, before Russia’s invasion. — Reuters