GBP/USD Outlook: Confined in familiar trading range, Powell’s speech eyed for fresh impetus

• GBP/USD witnessed some selling on Monday and was pressured by modest USD strength.
• The Ukraine crisis and the Fed’s hawkish outlook continued acting as a tailwind for the buck.
• The post-BoE rate range-bound price moves warrant caution before placing directional bets.

The GBP/USD pair struggled to capitalize on Friday's goodish rebound from the vicinity of the 1.3100 mark and kicked off the new week on a softer note. A combination of supporting factors acted as a tailwind for the US dollar, which, in turn, exerted some downward pressure on the pair through the early European session. The Russia-Ukraine conflict has already entered the fourth week, so far, has shown no signs of ending. This, along with the Fed's hawkish outlook, assisted the greenback to build on the previous session's modest gains and dragged the pair lower.

In the latest geopolitical developments, Ukraine's government defiantly rejected Russian calls to surrender the port city of Mariupol in exchange for humanitarian corridors. This comes after Russian forces advanced into the city following one of the deadliest rockets strikes on Saturday. This kept a lid on the recent optimistic move in the markets and weighed on investors' sentiment. The nervousness was evident from the prevalent cautious mood around the equity markets, which benefitted traditional safe-haven assets, including the greenback.

Meanwhile, the Fed announced the start of the policy tightening cycle last week and indicated that it could raise rates at all the six remaining meetings in 2022. Adding to this, two influential FOMC members said on Friday that the US central bank needs to adopt a more aggressive policy stance to combat stubbornly high inflation and further underpinned the buck. St. Louis Fed President James Bullard  - a known hawk - explained why he voted for a 50 bps rate hike and said that the central bank’s reputation was on the line if it failed to act with sufficient urgency.

Adding to this, Fed Governor Christopher Waller said the war in Ukraine was the reason he didn’t push for a 50 bps rate hike, but that was definitely on the table for upcoming meetings. Hence, the market focus now shifts to Fed Chair Jerome Powell's scheduled speech later during the US session. Apart from this, traders will take cues from the incoming headlines surrounding the Russia-Ukraine saga, which will influence the broader market risk sentiment. This, in turn, will drive the USD demand and provide some impetus to the pair amid absent relevant market moving economic releases.

Technical outlook

From a technical perspective, the pair, so far, has been oscillating well within the post-BoE trading range between the 1.3100 mark and the 1.3200 round figure. This, in turn, warrants some caution for aggressive traders and makes it prudent to wait for a convincing break through the mentioned band before positioning for a firm near-term direction.

With technical indicators on the daily chart holding in the bearish territory, sustained weakness below the 1.3100 handle would make the pair vulnerable to challenge the YTD low, around the 1.3000 psychological mark. Some follow-through selling has the potential to drag the pair further towards 1.2950 intermediate support en-route the 1.2900 mark.

On the flip side, acceptance above the 1.3200 level will be seen as a fresh trigger for bullish trades and set the stage for a move towards the 1.3300 mark with some intermediate resistance near the 1.3245 region. The momentum could further get extended and allow the pair to reclaim the 1.3300 mark for the first time since early March.