GBP/USD subdued in the mid-1.3100s as traders await fresh catalysts

• GBP is a modest underperformer amid a broadly quiet/subdued start to the week for FX markets.
• GBP/USD continues to trade in the mid-1.3100s and continues to struggle ahead of the 1.3200 mark.

It’s been a subdued start to the week for pound sterling as market participants continue to digest last week’s dovish BoE policy announcement that threw cold water on expectations for multiple further interest hikes this year. GBP is currently sat at the bottom of the G10 performance table, and down about 0.2% on the day versus the buck, in otherwise quiet FX market trade amid a lack of notable fresh macro drivers. Markets are awaiting fresh developments regarding the Russo-Ukraine war, as well as a barrage of Fed and BoE speak plus a smattering of tier one and two UK/US data releases throughout the week.

GBP/USD is thus experiencing fairly contained trading conditions as it pivots either side of the 1.3150 level and, as has been the case for the last three sessions, continues to struggle as it nears the 1.3200 level. The pair’s failure to get back above the 1.3200 level and key resistance in the 1.3160-75ish area in the form of the 2021 lows is not a good omen heading into this week.

If many analysts are right that last week’s aggressive rally in global equities (which supported GBP/USD at the time) was just a short-term bear market dead cat bounce, then the pair’s next stop could be a retest of recent lows around 1.3000. If the bearish thesis proves wrong and cable is able to bust above 1.3200, the next area of resistance for traders to be aware of is in the 1.3260-70 area.