The pair will likely remain in this range today, with the key support and resistance levels to watch being at 1.3540 and 1.3637.
Bullish View
- Buy the GBP/USD pair and set a take-profit at 1.3700.
- Add a stop-loss at 1.3545.
- Timeline: 1-2 days.
Bearish View
- Set a sell-stop at 1.3560 and a take-profit at 1.3500.
- Add a stop-loss at 1.3650.
The GBP/USD pair held steady as investors watched the ongoing happenings in Europe. The pair is trading at the important resistance of 1.3600, which is a few points above this week’s low of 1.3540.
Ukraine Crisis
The main theme in the market this week is on the ongoing crisis in Ukraine. On Tuesday, the Russian parliament passed a bill that allowed Putin to send troops to some parts of Eastern Ukraine.
In a statement, the country’s foreign minister said that the goal of this deployment was to ensure peace and stability in regions that have been at war since 2014. Russia accuses Ukraine of not doing enough to ensure peace and stability in the region.
Meanwhile, NATO warned that the new measures by Putin are intended to give him more power to invade deeper into Ukraine.
On Tuesday, the UK said that it will unleash sanctions on Russian politicians that voted to recognize Donetsk and Luhansk. Most members of the Russian Duma voted to pass a law recognizing the two breakaway regions. The UK also announced sanctions on five banks and three people close to Putin. Many politicians are calling on Boris Johnson to tighten sanctions.
The GBP/USD also reacted mildly to the latest American flash PMI and consumer confidence data. According to Markit, the US manufacturing and services sector did well in February as more states abandoned most Covid restrictions.
The manufacturing and services PMIs increased to 57.5 and 56.7, respectively. As a result, the composite PMI rose from 51.1 to 56.0. The same trend was seen in the UK, where the two sectors did well.
Further data by Conference Board showed that the country’s consumer confidence fell slightly in February as inflation remained to be the biggest challenge.
GBP/USD Forecast
The GBP/USD pair has been in a narrow range in the past few days. It is trading at 1.3600, which is between the ascending channel that is shown in yellow. It is also trading along the 25-day moving average while the Average True Range (ATR) has pointed upwards. The ATR is used mostly to measure the amount of volatility in the market. The pair is also lightly below the 23.6% Fibonacci retracement level.
Therefore, the pair will likely remain in this range today, with the key support and resistance levels to watch being at 1.3540 and 1.3637.
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