February 23, 2024

GBP/USD Offered Under 1.3200 as Anxiety Mounts Over Russia-Ukraine Talks, US Inflation Ahead Recoveries

The GBP/USD currency pair has shed some of its daily losses by 0.11% on the day in the vicinity of 1.3170 as it headed into the London open on Thursday. The cable was able to recover from its 16-months low point on Wednesday as the general risk-on atmosphere got to weigh quite heavily on the US dollar. Cautious sentiments in the lead-off to Thursday’s major geopolitical and economic events, however, are set to test buyers of the pair recently.

GBP/USD price chart. Source TradingView

In addition, news suggesting that there is a new attempt by the government of the United Kingdom to note Brexit as a significant change equally seemed to have a factor that underpinned the growth of the GBP/USD currency pair on the day before that.  The news report has it that the government wants to launch a study to state the economic importance of bringing back the imperial units of measuring in order to do a quantification of the said advantages of Brexit.

Ukraine Withdraws from NATO

The market’s pulse had an improvement on Wednesday as Ukraine withdrew its membership application from the North Atlantic Treaty Organization (NATO) and stated other terms of compromise if Russia also agreed to compromise. Moscow, however, turned down any idea of compromise, and it further weighed on the market sentiment as the West accused Russia of using biological and chemical weapons in Ukraine.

Continuous anxiety in the market and an upbeat US inflationary expectation print came together to give a firm standing to the US dollar index as of press time. The inflation measurement of the ten-year break-even inflation momentum of the Federal Reserve of St. Louis report refreshed data too at 2.9% before it dropped back to 2.84% at the close of business on Wednesday in the North American session.

Moving on, the GBP/USD traders might see more downward pressure since there are higher odds for negative news from the Russia-Ukraine peace talk scheduled to hold in Ankara, Turkey. The pair seller just got lucky to be favored by the American consumer price index speculated to increase to 7.9% against the initial 7.5%. 

It is worth noting that the Bank of England has been pleasing hawks lately, but strong American inflation might help the Federal Reserve to support a 50 basis points interest rate increase as expected. It will then increase the margin between the Bank of England and the Federal Reserve, and it could propel the US dollar further. 

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