GBP/USD Forecast: No signs of recovery as dollar capitalizes on safe-haven flows
- GBP/USD has extended its decline after posting daily losses on Thursday.
- The pair could face renewed bearish pressure if it drops below 1.3270.
- Investors remain focused on geopolitics while waiting for US NFP data.
GBP/USD failed to stage a convincing rebound on Thursday and faced selling pressure after breaking below the 1.3350 support area. The pair is edging lower toward 1.3300 on Friday and it is unlikely to reverse its direction unless there is a significant improvement in risk mood.
Following the second round of peace talks on Thursday, military aggression in Ukraine continues with Russia reportedly attacking and taking control of the Zaporizhzhia nuclear power plant. In the meantime, Ukrainian President Zelenskyy said that Russia is deliberately targeting Ukrainian infrastructure and residential areas while adding that only a no-fly zone would guarantee that Russia will not bomb the nuclear infrastructure.
In short, a de-escalation of the Russia-Ukraine crisis is nowhere in sight and the greenback is likely to preserve its strength as the safer option.
In the meantime, the sharp decline witnessed in the EUR/GBP pair suggests that the pound is preferred over the shared currency in the current market environment, helping the British pound stay relatively resilient against other major currencies. EUR/GBP is down 1.5% this week.
Later in the day, the US Bureau of Labor Statistics' February jobs report will be featured on the US economic docket. Nonfarm Payrolls are expected to rise by 400,000 following January's increase of 467,000. Investors are likely to ignore this data and stay focused on geopolitics as the Fed is clearly not concerned about the labour market.
GBP/USD Technical Analysis
1.3300 (psychological level) aligns as interim support before 1.3270 (static level). In case a four-hour candle closes below the latter, the pair could target 1.3200 (psychological level) next on the downside.
Meanwhile, the Relative Strength Index (RSI) indicator on the four-hour chart has declined to 40, confirming the bearish bias in the near term.
Resistances are located at 1.3350 (static level, 20-period SMA), 1.3400 (psychological level) and 1.3430 (static level).
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Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
