- GBP/USD has lost its recovery momentum in early European session.
- Investors remain cautious as Russian forces reportedly move towards Kyiv.
- GBP/USD could come under renewed bearish pressure with a drop below 1.3360.
GBP/USD has started to edge higher after slumping to its lowest level of 2022 below 1.3300 on Thursday but has struggled to preserve its recovery momentum in the early European session on Friday.
The recent market action shows that the British pound is one of the more vulnerable currencies in the face of the Russia-Ukraine war and sellers are likely to retain control unless the market mood improves ahead of the weekend.
The latest headlines suggest that Russia is preparing to make a move toward Kyiv. A Russian attempt to overthrow the Ukrainian government could further weigh on sentiment and cause GBP/USD to stay on the back foot. Meanwhile, Russia announced that it banned UK-registered airplanes from landing or crossing its airspace in retaliation to the UK sanctions, pointing to further escalation of geopolitical tensions.
So far, however, experts think that sanctions against Russia are unlikely to have a significant impact on global inflation or economic activity as they don't target the Russian energy sector or the global payment system SWIFT. It is difficult to say, however, whether or not the west will ramp up sanctions.
In short, a significant positive shift risk sentiment is unlikely to be witnessed in the short-term and GBP/USD recovery attempts should remain as technical corrections.
GBP/USD Technical Analysis
Following Thursday's action, static support seems to have formed at 1.3360. In case buyers give up on this level, the pair could extend its slide toward 1.3300 (psychological level) and 1.3280 (static level, multi-month low). Meanwhile, the near-term bearish bias is confirmed by the Relative Strength Index (RSI) indicator on the four-hour chart, which remains well below 50.
On the upside, the pair could extend its recovery if it manages to rise above 1.3420 (static level) and start using it as support. In that case, 1.3500 (psychological level) aligns as the next bullish target.
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