GBP/USD remains depressed below 1.3200 mark, eyes UK PMIs/geopolitics for fresh impetus

• GBP/USD edged lower for the second successive day on Thursday amid modest USD strength.
• The Fed’s hawkish outlook, Russia-Ukraine crisis continued acting as a tailwind for the buck.
• The downside remains cushioned ahead of the NATO meeting, UK PMI and the US macro data.

The GBP/USD pair remained on the defensive heading into the European session and was last seen trading just below the 1.3200 mark, down 0.10% for the day.

The pair struggled to capitalize on the overnight late rebound of around 30 pips from the 1.3175 area and edged lower for the second successive day on Thursday. The downtick was sponsored by some follow-through US dollar buying, though lacked any follow-through or bearish conviction.

The buck continued drawing support from growing acceptance that the Fed would adopt a more aggressive policy response to combat stubbornly high inflation. In fact, influential FOMC members, including Fed Chair Jerome Powell, raised the possibility of a 50 bps rate hike at the May meeting.

On the other hand, the British pound was weighed down by the fact that the Bank of England had softened its language around the need for future rate hikes at the last week's meeting. That said, stability in the equity markets capped gains for the USD and extended support to the GBP/USD pair.

The sentiment, however, remains fragile amid concerns about the lack of progress in the Russia-Ukraine peace negotiations. Apart from this, worries that surging crude oil prices would put additional upward pressure on the already high inflation should keep a lid on any optimistic move.

The fundamental backdrop seems tilted in favour of the USD bulls and supports prospects for some meaningful downside for the GBP/USD pair. That said, traders seemed reluctant to place aggressive directional bets and preferred to wait for fresh developments surrounding the Russia-Ukraine saga.

US President Joe Biden has arrived in Brussels and will meet NATO/European leaders in an emergency summit on the Ukraine War. The incoming geopolitical headlines will influence the risk sentiment, which, in turn, will drive the USD demand and provide some impetus to the GBP/USD pair.

In the meantime, traders will take cues from the release of the flash UK/US PMI prints. The US economic docket also features the release of Durable Goods Orders and Weekly Initial Jobless Claims, which might further contribute to produce some trading opportunities around the GBP/USD pair.

Technical levels to watch