- GBP/USD recovered around 100 pips from the daily low and has now filled the weekly bearish gap.
- Signs of stability in the equity markets undermined the safe-haven USD and extended some support.
- The upside remains capped amid fears about an escalation in tensions between Russia and the West.
The GBP/USD pair climbed to a fresh daily high during the mid-European session and is now looking to build on the momentum beyond the 1.3400 round-figure mark.
The pair rallied around 100 pips from the vicinity of the 1.3300 mark on Monday and has now filled the weekly bearish gap amid the emergence of some intraday US dollar selling. The nervousness over the worsening situation in Ukraine eased after the Russian negotiator said that they are interested to reach an agreement with Ukraine as soon as possible. This, in turn, led to a goodish recovery in the equity markets, which dented demand for the safe-haven greenback and was seen as a key factor behind the GBP/USD pair's strong intraday bounce.
According to the latest reports, the Ukraine-Russia dialogue has already started in Belarus and Russian media is coining this as 'peace talks', raising expectations for some de-escalation of tensions. Apart from this, a steep decline in the US Treasury bond yields, along with diminishing odds for a 50 bps Fed rate hike move in March, further undermined the greenback. The recent geopolitical developments now seem to have convinced investors that the Fed would not adopt a more aggressive policy stance to combat stubbornly high inflation.
It, however, remains to be seen if the GBP/USD pair is able to build on the move or meets with a fresh supply at higher levels amid the risk of a further escalation in tensions between Russia and the West. It is worth recalling that Western nations ramped up efforts to punish Russia for its invasion of Ukraine and imposed tough new sanctions, including cutting some of its banks off the SWIFT financial network. Moreover, Russian President Vladimir Putin upped the ante on Sunday and put the country’s strategic nuclear forces on high alert.
This makes it prudent to wait for some follow-through buying before positioning for any meaningful upside. In the absence of any major market-moving economic releases, the market focus will remain clues to fresh headlines surrounding the Ukraine crisis. This will continue to play a key role in influencing the broader market risk sentiment and the USD price dynamics, which, in turn, should provide some impetus to the GBP/USD pair.
Technical levels to watch
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
EUR/USD turns negative near 1.0760
The sudden bout of strength in the Greenback sponsored the resurgence of the selling pressure in the risk complex, dragging EUR/USD to the area of daily lows near 1.0760.
GBP/USD comes under pressure and challenges 1.2500
GBP/USD now rapidly loses momentum and gives away initial gains, returning to the 1.2500 region on the back of the strong comeback of the US Dollar.
Gold retreats from highs on stronger Dollar, yields
XAU/USD trims part of its initial advance in response to the jump in the Dollar's buying interest and the re-emergence of the upside pressure in US yields.
XRP tests support at $0.50 as Ripple joins alliance to work on blockchain recovery
XRP trades around $0.5174 early on Friday, wiping out gains from earlier in the week, as Ripple announced it has joined an alliance to support digital asset recovery alongside Hedera and the Algorand Foundation.
Week ahead – US inflation numbers to shake Fed rate cut bets
Fed rate-cut speculators rest hopes on US inflation data. After dovish BoE, pound traders turn to UK job numbers. Will a strong labor market convince the RBA to hike? More Chinese data on tap amid signs of slow Q2 start.