GBP/USD: Bears attack 1.3100 at 16-month low amid Russia-Ukraine stand-off
- GBP/USD stays on the back foot around multi-day low, pauses three-day downtrend.
- Market sentiment dwindles as UK resists backing US over Russia oil import ban.
- Brexit red-tape hindered aid to Ukraine, BOE says Brexit fallout finance will take years.
- Risk aversion can favor USD, US CPI will also be important to watch going forward.
GBP/USD treads water around the lowest levels since November 2021, recently making rounds to 1.3100 during Tuesday’s Asian session.
The cable pair slumped to the multi-day low amid broad US dollar strength as the market players rush to risk-safety amid escalating inflation fears due to the Ukraine-Russia tussles. However, headlines suggesting the US allies’ resistance in banning imports from Moscow seem to have paused the GBP/USD bears afterward.
Additionally, chatters over a restart of the human corridor to evacuate Kyiv’s civilians also challenged the pair sellers of late.
Even so, headlines from Reuters suggesting no change in tension joins red-tape due to Brexit to weigh on the cable prices. “Ukrainian officials said a Russian airstrike hit a bread factory in northern Ukraine on Monday, killing at least 13 civilians, while talks between Kyiv and Moscow made little progress towards easing the conflict,” said Reuters.
Amid these plays, S&P 500 Futures drop 0.30%, tracking Wall Street losses, whereas the US 10-year Treasury yields extend the previous day’s rebound from two-month to 1.77% up 2.5 basis points at the latest.
Moving on, a lack of major from the UK and the US may keep GBP/USD traders directed towards the Kyiv-Moscow headlines for fresh impulse. However, Thursday’s US Consumer Price Index (CPI) will be important as the Fed may have to extend push to for 0.50% rate-hike if inflation fears worsen.
Technical analysis
A clear downside break of an ascending trend line from September and May months of 2020, respectively near 1.3315 and 1.3255, directs GBP/USD bears towards the 1.3000 psychological magnet.