GBP/USD bulls have run into a wall of hourly resistance at 1.36 the figure

  • GBP/USD is facing resistance on the hourly chart near 1.36 the figure.
  • The 38.2% and 50% ratios are in focus around the area between 1.3580 and 1.3570.
  • BoE and Ukraine crisis have been the main fundamental drivers on Tuesday. 

GBP/USD is back to flat on the day having travelled between a low of 1.3538 and a high of 1.3604. The price is trying to break to the upside through trendline resistance but is meeting some meanwhile horizontal resistance, as illustrated below. Meanwhile, the mix of uncertainty surrounding the Ukraine crisis and a less hawkish outlook at the Bank of England are potential stumbling blocks for the bulls in the foreseeable future. 

At the start of the week, Russian President Vladimir Putin ordered troops into two breakaway regions of eastern Ukraine which have resulted in bouts of risk-off in financial markets, at times supporting the US dollar.  Putin said the troops would be “peacekeeping” in the breakaway regions – a claim dismissed by the United States as “nonsense”.

Consequently, among other sanctions from other nations, including the US and EU, the British PM Boris Johnson has announced fresh sanctions on Russia on Tuesday. The BBC reported that ”five banks have had their assets frozen, along with three Russian billionaires, who will also be hit with the UK travel bans.” The PM stressed these could be extended, but faced calls for tougher action now.

In other news, BoE’s Deputy Governor, Dave Ramsden, today advocated for more monetary tightening, but he also sees a “modest” rate hike over the coming months. The BoE raised interest rates to 0.5% this month from 0.25%, with Ramsden part of a minority who then voted for a bigger increase to 0.75%. Shaun Osborne, the chief currency strategist at Scotiabank, said in a note today,  “Ramsden cautioned that current market pricing for rate hikes would leave inflation below target in two years — echoing the warning from the Bank at this month’s meeting that markets are too aggressively priced for policy tightening.”

Markets will also keep a close eye on a number of other BoE speakers including Governor Bailey (who testifies to the Parliament’s Treasury committee) and Chief Economist Pill.

”Markets have moved to price a real chance of a 50bps hike by the MPC at their March meeting,” analysts at TD Securities explained. ”We believe the MPC is more likely to err on the side of sequential 25bps hikes rather than opt for a 50bps hike.”

GBP/USD technical analysis

The price had broken out of the downtrend’s resistance line and is now facing resistance on the hourly chart near 1.36 the figure. The 38.2% and 50% ratios align with prior structures between 1.3580 and 1.3570 that would be expected to act as support should there be a correction in the coming sessions. 

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