• GBP/USD has recovered following Thursday's BOE-inspired decline.
  • BOE sees significant increase in uncertainty amid Russia-Ukraine crisis.
  • The souring market mood is helping the dollar find demand early Friday.

GBP/USD has staged a recovery after dipping below 1.3100 on Thursday but has lost its momentum early Friday. The negative shift witnessed in risk mood could continue to weigh on the pair ahead of the weekend and drag it toward 1.3100 support.

On Thursday, the Bank of England (BOE) announced that it hiked its policy rate by 25 basis points to 0.75% as expected. Deputy Governor Jon Cunliffe, however, voted to keep rates on hold and didn't allow the British pound to capitalize on the rate increase. Additionally, the policy statement showed that the Russia-Ukraine crisis had "increased the uncertainty around the economic outlook significantly" and the bank's cautious tone further weighed on the GBP. 

During the American trading hours, the upbeat market mood, as reflected by the strong gains seen in Wall Street's main indexes, made it difficult for the dollar to find demand and opened the door for a GBP/USD rebound.

With the US Federal Reserve's and the BOE's policy meetings out of the way, investors shifted their focus back to the Russia-Ukraine conflict on the last trading day of the week.

A Ukrainian presidential aide said on Friday that talks with Russia was progressing slowly and reiterated that they will not negotiate an inch of the Ukrainian territory. On a concerning note, US Secretary of State Antony Blinken claimed that Russia might be contemplating a chemical-weapon attack.

Market participants could seek refuge toward the end of the day on heightened risks of a further escalation of the conflict on the weekend. In that case, the dollar could continue to gather strength and cause GBP/USD to edge lower.

GBP/USD Technical Analysis

GBP/USD was last seen trading below 1.3150 (Fibonacci 38.2% retracement of the latest downtrend). If this level turns into resistance, the next bearish targets are located at 1.3100 (Fibonacci 23.6% retracement, 50-period SMA on the four-hour chart) and 1.3050 (static level).

On the flip side, the pair could rise toward 1.3200 (psychological level, Fibonacci 50% retracement) if it manages to reclaim 1.3150 on the back of risk flows.

Meanwhile, the Relative Strength Index (RSI) indicator is edging lower toward 50, confirming the loss of bullish momentum.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended Content

Recommended Content

Editors’ Picks

EUR/USD jumps towards 1.0600 as USD wilts amid risk rebound

EUR/USD jumps towards 1.0600 as USD wilts amid risk rebound

EUR/USD is trading back above 1.0550,resuming its recovery towards 1.0600 in early Europe this Wednesday. The US dollar meets fresh supply as the risk rebound extends, despite looming recession fears. ECB Forum, US Durable Goods and Fedspeak eyed. 


GBP/USD consolidates gains below 1.2300 amid weaker USD, Brexit woes

GBP/USD consolidates gains below 1.2300 amid weaker USD, Brexit woes

GBP/USD is holding onto the latest upside below 1.2300 in early European trading, The risk-on mood dents the US dollar's safe-haven appeal while the UK presses on with changes to the Brexit deal despite EU opposition. US data awaited. 


Gold bulls aim for $1,850 on Russia news, softer USD

Gold bulls aim for $1,850 on Russia news, softer USD

Gold Price extends Friday’s recovery to $1,836 ahead of Monday’s European session. The precious metal’s upside moves could be linked to the softer US dollar, as well as chatters surrounding a ban on gold imports from Russia.

Gold News

SEC vs. Ripple: Brad Garlinghouse announces expansion out of the US if outcome is unfavorable

SEC vs. Ripple: Brad Garlinghouse announces expansion out of the US if outcome is unfavorable

XRP will expand out of the US if the payment giant faces a loss in the lawsuit. The community awaits the court's ruling on his speech and related documents. Analysts remain bullish on Ripple price

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!