GBP/USD hammered down to sub-1.3400 levels after Russia’s invasion of Ukraine

• GBP/USD plunged to a fresh monthly low amid a global rush to safe-haven assets, including the USD.
• Russia’s invasion of Ukraine spooked investors and triggered a massive sell-off in the equity markets.
• Technical selling below the 1.3500 mark also seems to have contributed to the steep intraday decline.

The GBP/USD pair added to its heavy intraday losses and tumbled to a fresh monthly low, below the 1.3400 mark during the mid-European session.

Following the recent repeated failures ahead of mid-1.3600s, the GBP/USD pair witnessed aggressive selling on Thursday and finally broke down of a more than three-week-old trading range. Investors dumped riskier assets and rushed to take refuge in traditional safe-haven assets after Russia launched an all-out invasion of Ukraine. This, in turn, provided a strong boost to the US dollar and exerted heavy downward pressure on the major.

It is worth mentioning that Russian President Vladimir Putin authorized a special military operation in Donbas earlier today. Moreover, reports indicated that Russian forces attacked the Ukrainian border around Belarus and also fired missiles at several Ukrainian cities. Ukraine added that troops were pouring across its borders into the eastern Chernihiv, Kharkiv and Luhansk regions, and landing by sea at the cities of Odesa and Mariupol in the south.

The headlines continued weighing on investors' sentiment and led to a steep decline across the global equity markets. Moreover, the geopolitical developments could dampen prospects for a 50 bps rate hike by the Bank of England at its March meeting. This was seen as another factor that undermined the British pound and further contributed to the GBP/USD pair's sharp decline, which took along some short-term trading stops below the 1.3500 psychological mark.

Hence, the downfall could further be attributed to some follow-through technical selling. A subsequent slide below the 1.3400 round figure now seems to have set the stage for the retest of 2022 low, around the 1.3360-1.3355 region. The latter should act as a pivotal point, which if broken decisively will be seen as a fresh trigger for bearish traders. Traders now eye the Prelim US GDP report for some impetus, though the focus remains on the situation in Ukraine.

Technical levels to watch