GBP/USD Price Tumbles Below 1.36 amid Brexit, Geopolitical Tension

• The GBP/USD pair bounces off the intraday low and reaches the peak of the short-term trading range.
• As the UK Treasury plans a major overhaul of the insurance industry post-Brexit, the EU’s Sefcovic cools Brexit breakthrough hopes.
• As Russia moves troops closer to Donetsk and Lugansk, Britain and the United States are preparing new sanctions against Russia.

As traders await Tuesday’s London session, the GBP/USD price loses further below the 1.3600 mark to consolidate the intraday.

Stronger UK PMIs favored the Bank of England (BOE) hawks as the pair started the week positively. Likewise, the Asian session started with a positive start for US dollar bulls due to a bout of risk aversion.

February’s preliminary UK manufacturing and services PMI data beat the market consensus during recent readings. Maros Sefcovic, executive director of the European Commission’s Brexit department, is quoted in UK Express as imagining trouble for the GBP/USD pair. The Guardian reported: “Treasury plans to unlock £10 billions of UK infrastructure funding through a post-Brexit insurance industry overhaul.” Maros Effkovi dashed hopes of a breakthrough in the EU after talks with Brexit chief Liz Truss in Brussels today.

The US Dollar Index (DXY) is up four days in a row, around 96.15, mainly due to the market’s risk-off sentiment. The West had previously warned of a Russian invasion of Ukraine, causing the mood to soured amid growing fears.

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During an emergency meeting called by the United Nations (UN), Secretariat-General for Political Affairs Rosemary A. DiCarlo expressed regret about Russian troops being sent into eastern Ukraine in an alleged peacekeeping mission. Western leaders’ willingness to announce new sanctions against Russia heightened market fears.

These games have caused equity futures in the US and Europe to remain bearish, while US Treasury yields have fallen seven basis points to 1.85% at the latest.

Going forward, Brexit headlines will combine with geopolitics to drive short-term GBP/USD movements. In addition, with the Federal Reserve recently relaxing its stance on interest rates, the first Markit business activity index for February will be important. On Monday, Federal Reserve Chair Michelle Bowman said that it was too early to predict whether the Fed would raise rates by 25 or 50 basis points in March.

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GBP/USD price technical analysis: Looking for directional bias

The GBP/USD price breaks below the 1.3600 handle. The price is below the 20-period SMA, which shows a bearish bias. However, the pair finds mild support by the 50-period SMA. The average daily range is 26% so far, indicating a low volatility day. The volume data shows no directional bias today.