GBP/USD Forecast: Pound to suffer losses if 1.3440 support fails on risk-aversion

GBP/USD has fallen sharply in the early European session on Thursday as investors have started to seek refuge following Russia's decision to launch an attack against Ukraine. GBP/USD is likely to stay on the back foot amid escalating tensions and additional losses could be witnessed if the pair falls below 1.3440.

Reflecting the intense flight-to-safety, the UK's FTSE 100 Index is falling more than 2% on a daily basis and US stocks futures indexes are down between 1.9% and 2.3%. The UK is yet to release an official response to Russian aggression and the EU is reportedly preparing the "harshest package of sanctions ever implanted."

Meanwhile, the German foreign ministry reportedly said that Russia rejected their offers to negotiate. 

The US Dollar Index is trading at its highest level since late January, suggesting that the greenback is capitalizing on safe-haven flows.

Later in the session, the weekly Initial Jobless Claims, January New Home Sales and the US Bureau of Economic Analysis' second estimate of the fourth-quarter GDP growth will be featured on the US economic docket. Nevertheless, investors will stay focused on geopolitical developments and a prolonged military conflict is likely to continue to favour the dollar over the British pound.

GBP/USD Technical Analysis

GBP/USD is already down more than 0.5% on the day and the Relative Strength Index (RSI) on the four-hour chart shows that the pair is technically oversold in the near term. Even if the pair manages to stage a technical correction, buyers are likely to remain hesitant in the current market environment.

On the downside, 1.3440 (static level) aligns as key support and the pair could push lower toward 1.3400 (psychological level) and 1.3370 (the starting point of the latest uptrend) if that support fails.

Resistances are located at 1.3500 (psychological level), 1.3530 (Fibonacci 38.2% retracement) and 1.3560 (100-period SMA, 200-period SMA).