GBP/USD falls below 1.32 on risk aversion
GBP/USD tumbles below 1.32 to a 14-month low as it comes under heavy selling pressure in the wake of USD strength and strong risk off trade flows.
Safe haven demand continues to boost the USD as the Russia Ukraine war intensifies and Russia shows no signs of slowing its assault on Ukraine. Over the weekend, Russia reiterated that it will continue attacking until their goal is achieved.
PM Boris Johnson has said that the UK is committed to ramping up pressure on Russia. His comments come amid reports that the West could sanction Russian oil, sending oil prices to $120 per barrel and fueling fears of stagflation.
There is no high impacting UK data due until GDP figures at the end of the week, which leaves sentiment in the driving seat.
USD continues to go from strength to strength on safe haven inflows and after strong US NFP report on Friday which saw 678k jobs created, support a more hawkish Fed next week.
The US Dollar index trading above 99.00 for the first time since May 2020. There is no high impacting US data due.
Where next for GBP/USD?
GBP/USD trades sharply lower breaking below several key supports. The pair is now eyeing 1.3140 December 2020 low as the next line in the sand, the 20 sma is crossing below the 100 sma in a bearish signal which could see sellers push below 1.3140 towards, 1.31 round number with a move below here opening the door to 1.3170.
It is worth noting that the RSI is pushing into oversold territory so some consolidation could be on the cards or even a move highers. Buyers would look for a move over 1.32 Friday’s low in order to bring 1.3275 the February low into play, with a move above here negating the near term down trend.