GBP/USD slides back below 1.3400 mark amid escalating Russia-Ukraine conflict

• GBP/USD surrendered a major part of its intraday gains amid the emergence of fresh USD buying.
• The worsening situation in Ukraine weighed on the sentiment and benefitted the safe-haven buck.
• The focus remains on fresh developments surrounding the Russia-Ukraine saga and NATO summit.

The GBP/USD pair retreated over 50 pips from the daily high and dropped back below the 1.3400 round-figure mark during the early part of the European session.

The pair attracted some buying on the last day of the week and built on the overnight solid rebound of around 100 pips from the two-month low, around the 1.3270 region. The intraday move up, however, ran out of steam ahead of mid-1.3400s amid the emergence of some US dollar dip-buying, bolstered by reports that Russian forces have entered the Obolon district in Kyiv.

According to the Kyiv Independent, the Ukrainian military is fighting off the Russian troops and there are also mentions of Russian air missiles spotted in north of Kyiv. The incoming headlines surrounding the Russia-Ukraine saga kept investors on edge, which, in turn, acted as a tailwind for the safe-haven greenback and attracted fresh selling around the GBP/USD pair.

Adding to this, calls to disconnect Russia from the so-called SWIFT global payment system should keep a lid on any optimistic move in the markets. French Minister of the Economy, Finance and the Recovery - Bruno Le Maire - said that cutting off Russia from SWIFT remains on the table but as a last resort. This favours the USD bulls, which should weigh on the GBP/USD pair.

Market participants now look forward to the US economic docket, highlighting the release of the Fed's preferred inflation gauge - the core PCE Price Index - and Durable Goods Orders. The data, however, might do little to influence the USD price dynamics or provide any impetus to the GBP/USD pair as the focus remains on developments surrounding the Russia-Ukraine saga.

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