British Pound Holds Ground After BoE Recalibrates Amid War Uncertainties. Will GBP/USD Go Lower?

British Pound, GBP/USD, BoE, BoJ, Yen, JPY, Crude Oil, AUD – Talking Points

• The British Pound is little changed today after Bailey comments undermined it
• The Bank of Japan has been active in the face of an ever-weakening Yen
• Ukraine war uncertainty has central bankers re-thinking. Where to for GBP/USD?

The British Pound has steadied today after a sell-off on Monday in the wake of comments by Bank of England Governor Andrew Bailey that indicated rate hikes may not be as aggressive as previously anticipated.

Currencies were quiet through the Asian session, with the Yen reclaiming some of the lost ground from Monday, but still near 6-year lows against the US Dollar.

The Bank of Japan were active in the debt market again today, implementing yield curve control, with the 10-year Japanese government bond remaining below 0.25%.

Global government bonds elsewhere have maintained their elevated yields with the benchmark 10-year Treasury note returning just under 2.50%.

APAC equities followed on from Wall Street’s lead with modest gains in most markets. China mainland was the exception with the Shanghai shutdown undermining stocks there.

Crude oil was also impacted by the shutdown with both of the WTI and Brent futures contracts down roughly 1.5%. Gold is steady near US$ 1,922 bbl.

Ahead of the Australian Federal budget to be released later today, Australian retail sales printed way above expectations for February, coming in at 1.8% instead of 0.8% anticipated. The relaxing of Covid-19 restrictions appears to have been the main contributor factor.

The Australian budget is unlikely to be a market mover with leaks revealing money for roads, dams and airports. Some sweetners for consumers include a reduction in the fuel excise, a cut in some alcohol taxes and first home buyer incentives. The Australian dollar has eased below 75 US cents.

Looking ahead, the US will see consumer confidence figures and a couple of Fed speakers will be crossing the wires.

The full economic calendar can be viewed here.

GBP/USD Technical Analysis

GBP/USD has several descending trend lines still in play. A recent rally above the 21-day simple moving average (SMA) was unable to be maintained and it could continue to offer resistance, currently at 1.31656.

Resistance may also be at the pivot points and recent highs of 1.32727, 1.32983, 1.34388 and 1.34862.

On the downside, support could be at the recent lows of 1.30656 and 1.29999.

Chart created in TradingView

— Written by Daniel McCarthy, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @DanMcCathyFX on Twitter