GBP/USD clings to the 1.3110s area amid a risk-off market mood on Russia-Ukraine

• The GBP/USD gains for the second consecutive day, up some 0.04%.
• Eurozone sanctions on Russia weighed on market mood, and equities fell.
• In the FX space, the safe-haven status of the greenback lifts the DXY above 99.00.
• GBP/USD Price Forecast: The downward bias remains intact below 1.3275.

The British pound remains confined to the 1.3100-60 range for the fourth consecutive day, amid a risk-off market mood and a soft US Dollar, courtesy of Russo-Ukraine linked issues, Fed tightening looming, and Fed and Bank of England speaking. At the time of writing, the GBP/USD is trading at 1.3115.

The market sentiment is mixed, as illustrated by European and US equities. The escalation of European sanctions on Russia weighed on sentiment. Germany and France expelled Russian diplomats on Monday. Also, there is mounting pressure for an oil embargo against Russia, but German Finance Minister Lindner said that a ban on Russian gas imports would be more harmful to Germany than Russia.

Over the weekend, BoE’s Deputy Governor Cunliffe crossed the wires. He expressed that while he “recognizes the risk of second-round effects and that further tightening of monetary policy might be necessary, I am not at present convinced that we will inevitably have to lean heavily and constantly against an embedding of an inflationary psychology as we progress through this challenging period and as the impact.”

On the Fed speaking side, Fed Governor Lael Brainard said that the US central bank “is prepared to take stronger action if inflation and inflation expectations suggest the need to do so.” She added that policy would be tightened “methodically” with a series of interest rates and would begin to lower the balance sheet as soon as the May meeting.

The US Dollar Index, a gauge of the greenback's value against a basket of its rivals, advances 0.30%, sits at 99.280, underpinned by the rise of the US 10-year T-note yield sitting at 2.541%, which climbs twelve basis points.

The UK economic docket featured the UK S&P Global/CIPS UK Services PMI Final, which came at 62.6, higher than the 61 estimated. On the US front, the US ISM-Non Manufacturing PMI rose to 58.3, higher than the 58.1 estimated and better than the 56.5 from the previous reading.

GBP/USD Price Forecast: Technical outlook

Cable has been range-bound for the last four trading sessions, unable to break under/above the 1.3100-60 area. Nevertheless, the daily moving averages (DMAs) above the spot price cement a bearish bias unless GBP/USD bulls reclaim November 26 1.3275 daily low-turned-resistance.

With that said, the GBP/USD first support level is November 13, 2020, daily low at 1.3105. A decisive break would expose the March 29 swing low at 1.3050, followed by the confluence of the bottom-trendline of the descending channel and the YTD low at  1.2999.