- GBP/USD remained under heavy selling pressure for the third day in a row on Monday.
- The global flight to safety continued to benefit the safe-haven USD and put pressure
- Technical selling below 1.3200 further contributed to the downward trajectory.
The pair GBP/USD it continued to lose ground during the middle of the European session and fell to the lowest level since December 2020, around the 1.3140 region in the last hour.
The pair added to last week’s heavy losses and witnessed some follow-up selling for the third day in a row on Monday amid an extension of the US dollar’s recent strong rally. Investors continued to dump riskier assets in the wake of a new escalation in the conflict between Russia and Ukraine. This, in turn, fueled demand for traditional safe-haven assets and pushed the USD to its highest level since May 2020.
In the latest development, US Secretary of State Antony Blinken said the Biden administration was in talks with European governments about banning Russian crude and natural gas imports. This has led to a sharp rise in crude oil prices and fueled fears of a major inflationary shock to the world economy. This was seen as another factor that weighed on already weaker risk sentiment.
Aside from this, mostly upbeat monthly US employment details on Friday and a rally in US Treasury yields further supported the dollar. The downward path took some short-term trading stops located near the 1.3200 round level. Therefore, the decline could be further attributed to some technical selling. A subsequent break below the 2021 low could already have set the stage for more losses.
There is no major market-moving economic data due for release on Monday from either the UK or the US, leaving the GBP/USD pair at the mercy of USD price dynamics. This, in turn, suggests that the market’s focus remains on the incoming geopolitical headlines ahead of the third round of Russia-Ukraine ceasefire talks.
Source: Fx Street