The continuous intraday descent of the GBP/USD trading pair was extended through the early European session on Wednesday, and it promptly fell to a new 2022 low in the vicinity of 1.3270 zones at the time of putting this report together.
GBP/USD price chart. Source TradingView
After the first uptick into the 1.3340 zones, the GBP/USD pair saw a new supply and dived deeper for the second day in a row on Wednesday as there is a renewed interest in the money market in buying the US dollar. Concerns about how hard the sanctions on Russia would hit and the escalating condition in Ukraine has continued to exert pressure on sentiments from investors. The evidence of this was seen in the fresh leg put down in the stock markets, which was taken as a significant factor that benefited the US dollar and its safe-haven status.
There are reports that Russia has increased its bombing activities across Ukraine, and a large column of military vehicles was spotted advancing towards the country’s capital, Kyiv. Aside from that, a good rebound on the American Treasury bond yields stretched more support to the pair. That said, the likelihood that there will no longer be a 50 basis points Federal Reserve interest rate increase in March has put odd bullish traders from placing hard stakes, and it helped to minimize deeper losses the pair could have incurred, at least in the immediate.
Eastern Europe’s War Drains Policy Hopes across the Pond
The ongoing conflict between Russia and Ukraine punctured hopes of a more stringent monetary policy reaction from the Federal Reserve to fight the inflation trying to get out of control. The latest steep decline in the American Treasury bond yields bears evidence to this fact. The yields on the standard ten-year American government bond fell to their lowest point since the 14th of January on Tuesday. This consequently calls for caution on the part of investors before they position for more depreciating moves for the GBP/USD pair.
From a technical point of view, acceptance under the 1.3300 figure might be taken as a new trigger for bears. However, the pair got some level of support close to the 1.3270 zones, which is expected to act as a major pivotal point. A clear break downward will strengthen the bearish bias, and it could set the course for a further slide in the direction of testing the 1.3200 benchmarks. If this happens, then the downward glide could extend further to the 2021 low in the vicinity of 1.3160 zones.