- The British pound holds its daily gains following positive UK economic data amid Eastern Europe escalation.
- The greenback remains trading softer despite an appetite for safe-haven peers.
- GBP/USD Technical Outlook: Neutral-upwards despite that the 200-DMA resides above the exchange rate.
The British pound retreats from daily highs amid increasing tensions in Eastern Europe. At the time of writing, the GBP/USD is trading at 1.3614, up some 0.13%. As abovementioned, geopolitical jitters caused a fall in the GBP/USD as of late amid a US bank holiday.
Risk-aversion looms the financial markets. Europea bourses trade in the red, while US equity futures drop between 0.73% and 1.66%. Further, the greenback keeps weakening in the day, with the US Dollar Index down 0.14%, sitting at 95.91.
UK’s Services PMI smashed expectations
The UK reported better than estimated Markit PMIs for February in the European session, led by the Services Flash rising to 60.8, higher than the 55.5 foreseen. Further, the Manufacturing Flash rose to 57.3, a tenth up than estimations, while the Composite rose to 60.2, higher than the 55.
The GBP/USD reacted positively to the news and rose to 1.3630. However, a shift in market mood put a lid on the move, even retreating most of the gains, as Russian/Ukraine headlines continue to grab investors’ attention.
Later in the day, Federal Reserve Governor Michelle Bowman, a voter in 2022, said that she favors a rate hike in the March meeting, though she is assessing its size. It is worth noting that her view on rates and balance sheet reduction would depend on the economy while emphasizing that the challenge for the Fed would be to bring inflation down without harming the economic expansion.
On Tuesday, the economic docket in the UK will feature Bank of England’s (BoE) Ramsden, followed by the release of CBI Industrial Trend Orders for February. Across the pond, House Prices data for December, Markit PMIs, and Consumer Confidence for February would be followed closely by GBP/USD traders.
GBP/USD Price Forecast: Technical outlook
From a technical perspective, the GBP/USD is neutral-upward biased, despite the 200-day moving average (DMA) located above the exchange rate, at 1.3683. That alongside a nine-month-old downslope trendline would be crucial barriers to overcome in the event of the pair achieving higher prices
The GBP/USD first resistance would be the trendline abovementioned around the 1.3635-50 area. Breach of the latter would expose the 200-DMA at 1.3683. Once it is cleared, the next support would be the 1.3700 mark.