GBP/USD is subdued in the 1.3000-30 area on dismal sentiment, mixed UK data

The British pound remains subdued and is forming a “bullish harami” candlestick pattern, meaning that the GBP/USD found a bottom around the 1.3000 mark and might consolidate in the near term. At the time of writing, the GBP/USD is trading at 1.3030.

Downbeat market mood,  courtesy of high global bond yields, geopolitics, mixed UK data, and China’s covid-19 outbreak, weighed on the GBP

On Monday, global equity markets recorded losses amid a downbeat market mood. Russia-Ukraine’s woes, worldwide higher bond yields, and China’s Covid-19 outbreak shifted sentiment.

While the Russia-Ukraine crisis extended for the seventh consecutive week, the UK, US, Germany, and Slovakia stated that they would provide military equipment to Ukraine. Ukraine’s President Volodymyr Zelenskyy expressed that they should not lose the possibility of a diplomatic solution to the war. On the Russian side, wires reported that Russian President Vladimir Putin is believed to have set himself four weeks to achieve some “victory” in Ukraine before the big Russian victory day on May 9.

Of late, Ukraine’s President Zelenskyy crossed the wires and said that Russia could make use of chemical weapons and added that they would take that threat seriously.

Aside from geopolitical chatter, China’s Covid-19 outbreak in the regions of Shanghai and Guangzhou weighs on appetite and oil prices. Shanghai reported 25,173 new asymptomatic cases on April 10, contrary to only 914 symptomatic ones.

Meanwhile, the GBP/USD remained in a choppy trading session, seesawing on the release of mixed UK economic data, led by the Gross Domestic Product (GDP) for February, which came at 0.1% m/m, lower than the 0.3% estimated. Contrarily, the GDP three-month average rose by 1%, more than the 0.9% foreseen.

On Tuesday, traders’ attention would focus on UK’s job figures and US Consumer Price Index. A higher than expected US inflation reading might open the door for another retest of the 1.3000 mark,

GBP/USD Price Forecast: Technical outlook

The GBP/USD downward bias remains intact. However, Monday’s price action formed a “bullish harami” candlestick chart pattern, meaning that the pair might have bottomed and could aim towards a sideways environment. That scenario might be playing out as the Relative Strength Index (RSI) is at 35.16, in bearish territory but directionless.

If the GBP/USD edges high, the first resistance would be April 8, 1.3082 swings high. Once cleared, the next resistance would be 1.3100, followed by December’s 2021 swing lows-turned-resistance at 1.3160, followed by 1.3200.

On the flip side, the GBP/USD first support would be 1.3000. A breach of the latter would expose November’s 2020 pivot low at 1.2854, followed by September 2020 cycle low at 1.2675.