GBP/USD struggled to break the resistance zone of -1/8 Murray. Since the beginning of this week, the pound has been trading within a price range between 1.3082 -1.3140 against the US dollar. Its modest intraday bounce is capped below the top of the downtrend channel that was formed since March 3.

The worsening of the situation in Ukraine makes investors take refuge in gold and the US dollar. This means that the British pound is under downward pressure as we can see in the chart above.

Investors remain concerned about the economic fallout from the Russian invasion of Ukraine. In addition to this, recent very high gains in commodity prices have fueled fears of an inflationary shock to the world economy, increasing the risk of stagflation.

The pair showed modest daily gains above 1.3100 in the early Asian session.

Further losses are likely in the short term unless GBP bounces back and consolidates above 1.3122 (SMA 21).

The uncertain outlook for the global economy and central bank policy make investors reassess their portfolios and the risks seem to be tilting towards further losses of GBP/USD.

Even though the US economy is less vulnerable to the negative impact of the escalating Russia - Ukraine conflict, the US economy is still struggles with multi-decade high inflation.

Next week, the FED is widely expected to increase its interest rates which could push down GBP/USD towards the level 1.2800.

On the 1-hour chart, we can see the formation of a symmetrical triangle. A sharp break above this triangle and a sharp break of the downtrend channel could ease the pressure on the British pound and we could see a rally with targets towards 0 /8 Murray at 1.3183 and towards the 200 EMA at 1.3285.

Our trading plan for the next few hours is to wait for a break above -1/8 Murray around 1.3122 to buy with targets at 1.3183, 1.3244 and up to 200 EMA at 1.3285.