GBP/USD sticks to modest intraday gains near 1.3600 mark, lacks follow-through

The GBP/USD pair maintained its bid tone through the early European session and was last seen hovering near the top end of its daily trading range, around the 1.3600 mark.

The pair built on the previous day's late rebound from the multi-day low, around the 1.3540-1.3535 area, and gained some positive traction on Wednesday amid subdued US dollar demand. Despite the recent geopolitical developments, the fact that new economic sanctions on Russia were not as bad as feared helped ease the nervousness over the situation in Ukraine. This was evident from a generally positive tone around the equity markets, which undermined the greenback's relative safe-haven status and acted as a tailwind for the GBP/USD pair.

The British pound also drew support from hawkish comments by the Bank of England (BoE) Deputy Governor Dave Ramsden, saying that some further tightening is likely to be appropriate in the coming months. This reinforced expectations for additional interest rate hikes by the BoE. In fact, investors are pricing in another rate hike at the next scheduled BoE meeting that concludes on March 17. This was seen as another factor behind the GBP/USD pair's intraday move up. That said, the upside seems limited amid rising geopolitical tensions.

The risk of an imminent Russian invasion of Ukraine might continue to weigh on investors' sentiment and keep a lid on the optimistic market move. It is worth recalling that Russian President Vladimir Putin upped the ante on Monday by recognizing two breakaway regions in eastern Ukraine as independent entities and allowing troops to enter the area to maintain peace. Moreover, Russia's upper house voted in favour of giving Putin the authority to deploy forces abroad. This should limit losses for the buck and cap the GBP/USD pair, at least for now.

Apart from this, the lack of progress in talks to resolve the problems with the Northern Ireland protocol of the Brexit agreement might further hold back bulls from placing aggressive bets. This makes it prudent to wait for strong follow-through buying before positioning for any further gains amid absent relevant market-moving economic releases, either from the UK or the US. That said, developments surrounding the situation in Ukraine will influence the USD, which, in turn, should provide some impetus to the GBP/USD pair.

Technical levels to watch