GBP/USD Outlook: Recovery Above 1.31 Lacking Strength, Eying US CPI

• A three-day downtrend remains suspended for GBP/USD, near multi-month lows.
• Britain opposes US support for a ban on oil imports from Russia, deteriorating market sentiment.
• The Bank of England said bureaucratic hurdles prevented aid to Ukraine, saying funding the consequences of Brexit would take years.
• The US Dollar may benefit from risk aversion, and it is important to keep an eye on the US CPI going forward.

The GBP/USD outlook is bearish despite a recent recovery attempt as the risk aversion prevails amid Ukranian crisis while Fed is looking to hike rates.

The GBP/USD price is trading around its lowest level since November 2021, after recently breaking the 1.3100 mark during Tuesday’s earlier London session.

Due to escalating inflation fears over the Ukraine-Russia standoff, the cable pair fell to multi-day lows as the sharp strength was observed in the US dollar. However, headlines suggesting US allies opposed Moscow’s import ban seem to have halted GBP/USD’s downward movement after that.

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In addition, sellers have recently been challenged to restart the evacuation corridor for civilians in Kyiv.

Reuters reports that the Brexit bureaucracy puts pressure on cable prices and does not alleviate tensions. At least 13 civilians were killed in a bakery in northern Ukraine by Russian airstrikes on Monday, and talks between Kyiv and Moscow did not resolve the conflict.

During those games, the S&P 500 futures are down 2.95%, trailing Wall Street’s losses, while the US 10-year Treasury yield has advanced 7 basis points to 1.844%, marking the end of a two-month recovery.

In addition, the absence of key data from the US and UK may encourage pound/dollar traders to keep a close eye on the headlines between Kyiv and Moscow for fresh impetus. The US Consumer Price Index (CPI) on Thursday will be crucial because a rate hike of 0.50% may be necessary if inflation fears mount.

GBP/USD price technical outlook: Bears dominating

After finding the bottom at 1.3081, the GBP/USD price found some respite and immediately jumped up 40 -50 pips. However, the pair maintains a negative outlook as the price is far below the 20-period SMA on the 4-hour chart. The average daily range for the pair is 43% as of now, which is normal.

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The volume data does not support the bulls as the widespread down bar broke the support with a huge volume. The upside attempt remains shallow with a declining volume.