GBP/USD eyes below 1.3000 on Russia-Ukraine war escalation amid China’s aid to Moscow

• GBP/USD looks to settle below 1.3000 amid a souring mood in the market.
• Investors eye one more interest rate hike from the BOE this week.
• Fed’s monetary policy holds utmost importance for FX currencies this week.

The GBP/USD pair has been dumped heavily by the market participants on intensifying fears of China’s bailout to Russia. The US has told its allies that Russia has requested military assistance from China in the ongoing Russian invasion of Ukraine. Moreover, the latter has displayed its willingness to support the former in the future. The US has also stated that the dragon economy might be providing military assistance to Russia already.

Meanwhile, ''The Chinese embassy in the US on Sunday said it had no knowledge of any Russian request or positive Chinese response to Moscow. Russia on Monday also denied making any request to China.''

The situation has improved the appeal for safe-haven and investors have dumped the cable amid a broader risk-aversion theme.

Apart from the geopolitical tensions, interest rate decision from the Bank of England (BOE) is more in focus. The BOE have hiked their interest rates by 25 basis points (bps) twice in December and February. The BOE is more likely to follow the rate hike streak this time too and push the benchmark rates to 0.75%. Britain’s National Statistics will announce the Claimant Count Change (number of unemployed people in the UK) on Tuesday, which will have a significant impact on BOJ’s monetary policy.

Meanwhile, the US dollar index (DXY) is trading lackluster around 99.00 and is locating a trigger that could drive the DXY out of the woods. Monetary policy from the Federal Reserve (Fed) holds utmost importance this week as the stance from the dictation will help the market participants to initiate fresh positions.