Above: File Image. NATO Secretary General Jens Stoltenberg meets with the President of Ukraine, Volodymyr Zelensky. Source: NATO. Access: Flickr. Licensing: Creative Commons. This week Zelensky said Ukraine would no longer seek to join NATO.

The Euro looks set to remain supported against the British Pound as hopes grow Russia and Ukraine will reach an accord to end the war.

The stances presented by the Ukrainian and Russian delegation at ongoing bilateral talks "have become more realistic," Ukrainian President Volodymyr Zelensky said in his most recent assessment of ongoing negotiations.

The talks continue today.

"The meetings are continuing and, as I have been told, the stances presented at the negotiations have become more realistic," Zelensky said in a video released on Telegram.

"It will take time to reconcile decisions with the interests of Ukraine. This is difficult but important," he added.

In a clear signal of progress Russian Foreign Minister Sergei Lavrov said on Wednesday in an interview with the RBC channel that there is hope for reaching a compromise.

"I rely on the opinion of our negotiators. They say that negotiations have not been easy for apparent reasons but still there is certain hope for reaching a compromise," he said.

"There are signs of optimism coming through on financial markets today with the FTSE 100 opening up 1.2% in early trade amid fresh signs a negotiated deal to end the conflict in Ukraine may be a step closer," says Sophie Lund-Yates, Lead Equity Analyst at Hargreaves Lansdown.

Above: GBP/EUR at daily intervals.

Secure a retail exchange rate that is between 3-5% stronger than offered by leading banks, learn more.

Mykhailo Podolyak, adviser to the head of the Ukrainian Presidential Office, did however warn "the negotiating process is extremely complicated and viscous. There are fundamental differences."

Former Moldovan President Petru Lucinschi has meanwhile said in an exclusive interview with Interfax "the hostilities in Ukraine will end in a few days".

Movement towards a potential deal between Russia and Ukraine have been helped by Zelensky's assertion that Ukraine would no longer seek to join NATO, a key demand made by Russia.

"The neutral status [of Ukraine] is being seriously discussed, clearly, together with the security guarantees. This is exactly what President Putin said at a press conference in February: any acceptable variants, any mutually acceptable guarantees of security for Ukraine and all countries, including Russia, except NATO enlargement," Lavrov said.

It was last week that financial markets began to 'price in' a negotiated settlement to the conflict in earnest, with oil and gas prices plummeting from recent highs.

Euro exchange rates rose sharply.

The initial shock to financial markets caused by Russia's invasion of Ukraine helped the Pound to Euro exchange rate rally to its highest level since October 2016, but hopes for a negotiated settlement to the conflict have since seen the pair fall back to just below 1.19.

Reference rates at publication:

GBP to EUR: 1.1900High street bank rates (indicative): 1.1485 - 1.1570Payment specialist rates (indicative): 1.1795 - 1.1820Find out more about specialist rates and service, hereSet up an exchange rate alert, hereThe question for those watching the Euro and Pound is how much of the good news has already been factored in: will a final settlement trigger another bout of Euro buying, or is the lion's share of the outcome now 'in the price'?

Markets are inherently forward looking by nature, suggesting the latter outcome is the mist likely.

If the relief trade has largely run its course then the market will likely start focussing on relative monetary policy dynamics between the two currencies: i.e. interest rate policy stances at the Bank of England versus the European Central Bank.

The Bank of England is tipped to raise interest rates again on Thursday, with further hikes in 2022 likely to be signalled.

This could help the Pound hold firm, although there are no clear catalysts on the radar that suggests a material rally back to the 2022 highs towards 1.22 are at hand.

But the ECB is also looking to normalise policy and at least one rate hike is likely by the end of 2022 given the sharp rise in Eurozone inflation currently underway.