GBP/USD tumbles towards 1.3300 ahead of Putin’s nuclear deterrent on Ukraine

• GBP/USD has opened on a gap down note below 1.3350 on Putin’s nuclear deterrent on Ukraine.
• The expectations of a recession in Europe have set a negative undertone in the market.
• The Russian-Ukraine negotiations may provide fresh impetus to investors.

The GBP/USD pair has opened on a negative note on Monday, heading towards 1.3350, as investors see a wave of risk-aversion on Russia’s threat of nuclear attack on Ukraine. The move has been called ‘totally unacceptable' by US President Joe Biden, being the largest assault in Europe since the Second World War.

Investors are also focusing on expected negotiations between the Kremlin and Ukraine. The nations have decided to call for negotiations at the Belarusian-Ukrainian border without any preconditions.

On that Ukrainian President Volodymyr Zelenskyy said "I do not really believe in the outcome of this meeting, but let them try, so that later not a single citizen of Ukraine has any doubt that I, as president, tried to stop the war,". This is because investors are hopeful for de-escalation but any negative outcome after the meeting may spurt uncertainty in an already volatile environment.

The market participants are also getting nervous about the Federal Reserve (Fed) monetary policy outcome as each day passes before March 16-17. An aggressive tightening policy from the Fed is on the cards amid rising oil prices. Also, the central bank seems to be in dilemma over choosing an aggressive policy to combat inflation or to prefer some leniency ahead of recession concerns in Europe amid the geopolitical tensions.

Other than the development over the geopolitical tensions and Fed’s monetary policy expectations, investors will keep an eye on the British Final Manufacturing PMI due on Tuesday.