GBP/USD holds far from weekly low, recovers 1.3400

• US dollar weakens on Friday amid risk appetite.
• A quiet session for cable on Friday after sharp moves.
• GBP/USD is about to post the worst weekly results in months.

The GBP/USD has been moving sideways near 1.3400 in the European session. The pair is trading modestly higher on Friday, holding onto late Thursday’s rebound but in negative territory for the week.

After falling on Thursday to 1.3272, GBP/USD rebounded and peaked on Friday at 1.3440, before retreating to 1.3365. The mentioned level has become a key short-term support. The pair is moving around 1.13400, about to post the worst weekly loss in months.

The deterioration in market sentiment weighed on cable, while the pound lagged behind other currencies in the rebound. EUR/GBP hit a two-week high above 0.8400

Week ahead

Key economic report next week includes the US employment report, while in the UK, no major releases are due, and the focus will be on central bankers. “By the end of Wednesday, we will have heard from all nine Bank of England committee members in the space of a little over a week. That's interesting in itself, having had virtually no commentary from Bank officials in the December-February intermeeting period”, explained analysts at ING.

Regarding the UK outlook, analysts at ING point out “the pressure on household incomes from energy prices is likely to result in slower, perhaps negative growth, later this year. We also expect some of the recent pressure on wages to abate now that the post-reopening movement in the jobs market slows. We therefore think the Bank will deliver fewer hikes than markets expect this year.”

Despite a positive ending so far for financial markets, the advance of Russian troops in Ukraine and its consequences will continue to be a key driver.

Technical levels