The Pair Still Attracts Buying

There was a higher climb for the GBP/USD currency pair in the course of the early European session on Tuesday, and it stepped a bit backward, close to the mid 1.3100 zones, although there was no form of bullish conviction in the uptick.

GBP/USD price chart. Source TradingView

After there had been a directionless movement of prices the day before, the leading pair was able to draw to itself some purchases on Tuesday; it was boosted by an average weakness in the US dollar. The signal of stability that came to the stock market affected the demands for conservative safe-haven commodities, and it was not helpful to the US dollar in consolidating the gains it recorded in the course of the past three days. With that consideration in the basket, continuous fighting in Ukraine, as well as expectations of more hawkish policy positions from the US Federal Reserve, are serving as a tailwind to the pair, and they are capping the increase of the major.

Market Sentiments Could Be Tipped in Any Direction

The fragility of the market sentiment continues in the midst of possible sanctions coming from Western countries against Russia as there are widespread allegations of war crimes in Ukraine. As reported, Ukraine directly accused Russian troops of massacres and extra-judicial killings in Bucha and places around Kyiv. This led to the Minister of Defense in Germany, Christine Lambrecht, calling for the European Union to ban gas importation from Russia. The recent news from the geopolitical arena deflated hopes that there would be a diplomatic resolution to the crisis. It, therefore, puts a lid on further moves of optimism going on in the markets.

Importantly, there seems to be a strong conviction on the part of investors that the Federal Reserve is going to take up a more stringent monetary policy position and would increase the interest rate by a hundred basis points in the course of its two policy meetings in order to fight the aggressive inflation to a standstill. This was further made more evident by the increase that attended the US Treasury bond yields, and it gives more supporting structure to the US dollar.

Therefore, a lot of the market’s focus will now be on the Federal Open Market Committee meeting minute, which is set to be out on Wednesday. For now, traders might wait out and put off any aggressive bet placement over the GBP/USD currency pair.