GBP/USD struggle at 1.3600, retreats to 1.3550 as market mood dampened on Ukraine crisis

• Ukraine - Russia conflicts, grab market participants’ attention, again.
• Bank of England members at the UK Parliament Treasury Committee pushed back against “aggressive” monetary policy tightening.
• GBP/USD Technical Outlook: Failure at 1.3600 originated a move towards 1.3500.

The British pound’s failure to hold above 1.3600 exacerbated a move towards the 1.3550  area as geopolitical angst rises and Bank of England dovish language. At press time, the GBP/USD is trading at 1.3551.

Update of the Ukraine crisis in Eastern Europe

Ukraine – Russia tensions increase. What started as a “calm” day in the financial markets has taken its toll, as US press via Newsweek expressed that an invasion from Russia could occur within 24/48 hours.

The article said that Ukraine’s President has been warned that Russia “will highly begin an invasion within 48 hours based on US intelligence.” Russia’s invasion would consist of airstrikes, cruise missiles, ground invasion, and cyberattacks, as reported by a US intelligence official.

Earlier on the day, BoE’s officials spoke before the UK Parliament Treasury Select Committee on Wednesday. The BoE Governor Andrew Bailey said that inflations risks are tilted to the upside but still “two-sided,” cautioning investors against aggressive betting on future interest rates. At the same hearing, another member who voted for a 50-bps rate hike at February’s policy meeting said the decision had been finely balanced. Another, who also voted for a 50-bps increase, said he now sees “modest” tightening over the coming months.

So, geopolitical anxiety and BoE’s dovishness boosted the prospects of the greenback, weighing on the GBP. Furthermore, the GBP/USD bull’s failure to break the 1.3600 mark exacerbated cable’s downward move, caused by profit-taking and selling pressure, as the GBP/USD fell 50-pips.

In the meantime, the US Dollar witnessed fresh ebbs into it, as the US Dollar Index, which measures, the greenback’s value against a basket of six currencies, edges up 0.17%, sitting at 96.19.

GBP/USD Price Forecast: Technical outlook

In the last two days, the GBP/USD finished with losses, though never below the 1.3550 mark. Initially appeared to be consolidation before resuming the uptrend, but Wednesday’s price action has fueled the expectations of a more significant than estimated downward move.

The GBP/USD first support would be 1.3550. Breach of the latter exposes the 50-day moving average (DMA) at 1.3512, followed by the 100-DMA at 1.3502.