- GBP/USD moves lower on Thursday giving back some of the previous day’s strong recovery gains.
- Geopolitical risks continue to benefit the safe-haven USD and put downward pressure on the pair.
- The market focus will continue to be glued to the new developments surrounding the war between Russia and Ukraine.
The pair GBP/USD remains on the defensive during the first part of the European session on Thursday, moving close to the daily low around the 1.3380 region after being rejected at a daily high of 1.3417.
The pair struggled to capitalize on the previous day’s solid rebound of over 130 pips from the 1.3270 yearly low and moved lower on Thursday amid modest US dollar strength. Concerns about the economic impact of the Russian invasion of Ukraine continued to benefit the safe-haven USD and acted as a headwind for the GBP/USD pair.
In fact, the news indicates that Russia has intensified the bombing of Ukrainian cities and Russian forces have captured the Black Sea port of Kherson. Having said that, hopes of Russian-Ukrainian ceasefire talks capped USD gains. Apart from this, the diminishing odds of a 50 basis point Fed rate hike in March should help limit losses for GBP/USD.
Recent geopolitical events now appear to have convinced investors that the Fed would refrain from opting for a more aggressive monetary policy response to combat stubbornly high inflation. This was evident from the previous day’s muted reaction to Fed Chairman Jerome Powell’s comments that the central bank could take tougher action if inflation levels don’t come down.
Market participants now await the release of the final UK services PMI to provide a boost ahead of the usual US initial jobless claims data. Investors could continue to take cues from the second day of testimony from the Fed Chairman Jerome Powell before the Senate Banking Committee. The focus, however, will remain glued to the news about the war between Russia and Ukraine.
GBP/USD technical levels
Source: Fx Street
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
