Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.3485.
- Add a stop-loss at 1.3350.
- Timeline: 1-2 days.
Bearish view
- Sell the GBP/USD pair and set a take-profit at 1.3320.
- Add a stop-loss at 1.3450.
The GBP/USD pair held steady in the overnight session as the market assessed the latest developments in Ukraine and Russia. The pair rose to a high of 1.3415, which is about 1% above the lowest level on Monday.
US Dollar Retreats
The GBP/USD pair bounced back as investors continued focusing on the crisis in Europe. On Monday, representatives from Moscow and Kiev met along the Ukrainian border with Belarus, where they held detailed deliberations on ceasefire. The two sides agreed to meet again as they went to consult their capitals.
The UK has been in the forefront of ramping up sanctions on Russia. Its football federation has announced that it will not play Russia in the near term while the Boris Johnson administration is lobbying to get rid of Russia from interpol.
At the same time, the UK has frozen some assets of the Bank of Russia and announced sanctions on top Russian politicians.
The GBP/USD pair rebounded as investors assessed the implications of these risks to the UK economy. Also, it rose as the US dollar declined across the board while American stocks and cryptocurrencies like Bitcoin and Ethereum soared.
The new developments on Ukraine will be the main catalysts for the pair today. As such, the key economic numbers from the UK and US will not have a major impact. In the morning session, the Nationwide Society will publish the latest home price index data. Analysts expect the data to show that home prices held steady in February after they rose by 11.2% in the previous month.
The other important data will be on the performance of the UK and US manufacturing sectors. Analysts expect the data to show that the two countries saw robust manufacturing activity although inflation remained a challenge.
GBP/USD Forecast
The GBP/USD pair rose slightly in the overnight session. It rose to a high of 1.3400, which was substantially higher than the lowest point on Monday. On the four-hour chart, the pair moved below the 25-day and 50-day moving averages. It is also a few points below the key resistance level at 1.3485, which was the lowest level on February 15th. The RSI has managed to move from the oversold level and is pointing upwards.
Therefore, the pair will likely hold steady today as investors continue to focus on the Ukrainian issue. If this happens, the next key resistance level to watch will be at 1.3485.
