- GBP/USD has edged lower toward 1.3000 at the beginning of the week.
- The greenback preserves its strength despite improving market mood.
- GBP/USD could come under heavy bearish pressure should 1.3000 support fail.
After having started the week with a small bullish gap, GBP/USD has lost its traction and touched its weakest level since November 2020 at 1.3008 during the Asian trading hours on Monday. The pair is trading near Friday's closing level of 1.3030 in the early European session as investors remain hopeful for a de-escalation of the Russia-Ukraine conflict.
Reflecting the upbeat market mood, US stock index futures are rising between 0.7% and 0.9%. Despite the risk-positive atmosphere, the greenback is holding its ground on Monday and not allowing GBP/USD to gather bullish momentum. With the benchmark 10-year US Treasury bond yield rising 2% on the day at 2.04%, the US Dollar Index is moving sideways above 99.00.
According to RIA news agency, Russian delegate Leonid Slutsky noted over the weekend that the latest talks with Ukraine made substantial progress. "This progress may grow in the coming days into a joint position of both delegations, into documents for signing," Slutsky added. On a similar sentiment, Ukrainian negotiator and presidential adviser Mykhailo Podolyak tweeted out that Russia was carefully listening to Ukraine's proposals and that there was dialogue.
Officials from Ukraine and Russia will reportedly hold a video conference at 0830 GMT on Monday. In case markets continue to price in a diplomatic solution conflict to the conflict, GBP/USD is likely to capitalize on a relief rally. On the flip side, a negative shift in risk sentiment could provide a boost to the dollar and weigh on the pair.
There won't be any high-tier macroeconomic data releases from the US on Monday.
GBP/USD Technical Analysis
GBP/USD faces interim resistance at 1.3050 (static level). In case a four-hour candle closes above that level, the pair could extend its recovery toward 1.3100 (20-period SMA on the four-hour chart, static level) and 1.3150 (static level).
On the downside, 1.3000 (psychological level) aligns as critical support. If that level turns into resistance, 1.2920 (static level) could be seen as the next bearish target.
In the meantime, the Relative Strength Index (RSI) indicator on the four-hour chart is still below 50, suggesting that the pair is still in a corrective phase.
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.
Recommended Content
Editors’ Picks
AUD/USD gains ground due to risk-on mood, US CPI awaited
AUD/USD remains steady with a positive sentiment despite the lower-than-expected Wage Price Index released on Wednesday by the Australian Bureau of Statistics. This index serves as an indicator of labor cost inflation. The appreciation of the Aussie Dollar could be attributed to the improved risk appetite.
USD/JPY extends its upside above 156.50 ahead of US CPI, Retail Sales data
The USD/JPY pair trades in positive territory for the fourth consecutive day near 156.55 on Wednesday during the Asian session. The uptick of the pair is bolstered by the speculation that the Federal Reserve might maintain rates higher for longer amid the elevated inflation.
Gold price trades with a mild positive bias, US CPI and PPI data loom
Gold price posts modest gains on the weaker US Dollar on Wednesday. The rising gold demand from robust over-the-counter market investments, consistent central bank purchases, and safe-haven flows amid Middle East geopolitical risk act as a tailwind for XAU/USD.
Ethereum bears attempt to take lead following increased odds for a spot ETH ETF denial
Ethereum is indicating signs of a bearish move on Tuesday as it is largely trading horizontally. Its co-founder Vitalik Buterin has also proposed a new type of gas fee structure, while the chances of the SEC approving a spot ETH ETF decrease with every passing day.
US CPI data expected to show slow progress towards 2% target
The US Consumer Price Index is set to rise 3.4% YoY in April, following the 3.5% increase in March. Annual core CPI inflation is expected to edge lower to 3.6% in April. The inflation report could influence the timing of the Fed’s policy pivot.