- GBP/USD is down 0.75% on the day amid a mixed market mood and a firm US dollar.
- The Covid-19 Omicron outbreak in China and unchanged Russian-Ukrainian discussions continue to weigh on appetite for riskier assets, weighing on the British pound.
- GBP/USD Price Forecast: Bias to the downside, targeting 1.3000.
The GBP starts the week down 100 pips amid broad US dollar strength in financial markets courtesy of rising yields as market players expect a 50 bps hike in the fed funds rate ( FFR) by the US central bank. On top of that, the market mood is mixed as European stocks rise, while across the pond stocks fluctuate. At the time of writing, the GBP/USD pair is trading at 1.3078.
Dollar Holds Firm as China and Eastern Europe Conflict Weighs on Sentiment
The US dollar index, a gauge of the value of the greenback against a basket of rivals, advanced 0.42%, retraced the 99,220 level, while the yield on the 10-year US Treasury bond fell six basis points to 2,429. %.
Factors such as the Covid-19 Omicron outbreak in China and the ongoing conflict between Russia and Ukraine keep investors uneasy. Russian Foreign Minister Lavrov said a meeting between Zelenskiy and Putin would be counterproductive, while the Kremlin stressed there had been no progress.
Midway through the European session, Bank of England Governor Andrew Bailey made remarks at an event in Brussels. Bailey said that “changes in commodity markets after the Russian invasion of Ukraine posed a risk to financial stability, and the challenges facing the global economy are greater than after the global financial crisis,” according to Reuters.
He further added that the rise in energy prices would be the most significant since the 1970s. Asked about the rate hike at the May meeting, the BoE governor said the situation is “very volatile.” ” after the invasion of Ukraine by Russia, which raised energy prices.
Apart from this, the US economic calendar presented the Goods Trade Balance for February, which was -106.59 billion dollars less than -107.57 billion dollars in January.
GBP/USD Price Forecast: Technical Outlook
GBP/USD is still skewed to the downside, with Monday’s decline extending past Dec 8, 2021 lows at 1.3160 ​​and Nov 13, 2020 daily low at 1.3105 as the Selling pressure builds on the pair as GBP targets the 1.3000 figure. Also, crossing the 50 day moving average (DMA) below the 100 DMA, each at 1.3381 and 1.3392, adds fuel to the downside move.
That being said, the first GBP/USD support would be March 15 at 1.2999. The break of the latter would expose the daily low of November 2, 2020 at 1.2853, followed by the September 2020 lows at 1.2675.
Technical levels
Source: Fx Street
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