- GBP/USD remains on the way to second weekly loss despite the latest inaction.
- Chatters over UK PM Johnson’s retreat from triggering Article 16 before Stormont’s elections may help in Brexit talks.
- Traders remain cautiously optimistic despite Russia-Ukraine agreement over safe passage to civilians from Kyiv.
- US NFP, risk catalysts may keep exerting downside pressure on the quote but the odds of surprises can’t be ruled out.
GBP/USD bears took a breather around 1.3345-50 amid Brexit optimism during early Friday morning in Asia. Even so, the cable pair remains on the back foot for the second consecutive week as the US dollar cheers cautious mood in the market, mainly due to the Ukraine-Russia standoff and chatters over the Fed’s 0.50% rate hike in March.
The Financial Times (FT) came out with the news quoting some of the UK Government insiders while saying, “War in Ukraine has reshaped ministerial thinking on the protocol ahead of May’s Stormont elections.” The news makes sense and can help break the deadlock over the Northern Ireland (NI) talks in the latest Brexit negotiations.
On a different page, Kyiv and Moscow agreed for a safe passage for Ukraine’s civilians during the second round of talks and showed readiness for the third phase of negotiations. The positive development should have ideally favored risk appetite but doubts over Russian military intentions keep traders skeptical.
Elsewhere, Fed Chair Jerome Powell reiterated his support for a 0.25% rate hike, actually showing readiness for a 0.50% rate-lift in the March meeting amid rising inflation fears. The same joined mixed US data and the market’s anxiety to keep the US Dollar Index (DXY) on a front foot for the fourth consecutive week. It’s worth noting that the greenback gauge renewed 21-month high the previous day.
That said, US ISM Services PMI eased for the third consecutive month in its latest release but the second-tier job data and Factory Orders came in positive. At home, UK Services PMI for February eased below 60.8 initial forecasts to 60.5.
Against this backdrop, US Treasury yields and Wall Street closed in red, despite the initial positive performance, but the S&P 500 Futures print mild gains by the press time.
Looking forward, GBP/USD traders may keep their eyes on the risk catalysts for fresh impulse. Also important will be the monthly readings of the US jobs report, mainly the Nonfarm Payrolls (NFP) figure.
Read: US Nonfarm Payrolls February Preview: Fed policy runs through Kyiv
Technical analysis
GBP/USD remains inside a 170-pip trading range between 1.3270 and 1.3440 since last week but sustained trading below the previous support line from late December 2021 keeps the pair sellers hopeful.
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