• GBP/USD extends U-turn from multi-day bottom amid sluggish markets, USD retreat.
• UK announced additional sanctions on Russia, Moscow-Kyiv talks continue.
• Upbeat UK jobs report underpins hopes of BOE’s successive rate hikes but the inflation woes may test the cable bulls.
• Fed is up for a 0.25% rate hike, major attention is on the economic projections, Chairman Powell’s speech.

GBP/USD treads water around 1.3040-50 amid anxious market conditions during Wednesday’s Asian session.

The cable pair snapped a three-day downtrend to bounce off the lowest levels since November 2021 following the upbeat UK jobs report. Also on the positive side was the US dollar’s retreat amid pre-Fed caution.

That said, the UK Claimant Count Change dropped to -48.1K for February, versus -31.9K prior, whereas the ILO Unemployment Rate declined below 4.0% market forecasts and 4.1% previous readouts to 3.9% for three months ended in January.

Read: UK Unemployment Rate drops to 3.9% in January vs. 4.0% expected

The US Dollar Index (DXY) declined for the first time in four days on Tuesday, down 0.05% around 98.90 by the press time, as the US Treasury yields fail to stay firmer around a multi-day high. That said, the US 10-year Treasury yields ended Tuesday unchanged despite rising to mid-2019 levels during the initial day, down two basis points (bps) to 2.142% at the latest. On the same line, the five-year bond coupon also eases from the highest levels since May 2019 marked the previous day. Further, S&P 500 Futures print mild losses despite the positive performance of Wall Street.

It’s worth noting that the recent cautious optimism surrounding the Ukraine-Russia peace talks and hopes of faster monetary policy tightening by the Bank of England (BOE) favor the GBP/USD bulls. However, fresh covid fears from China and the wider bullish expectations from the Fed challenge the pair buyers.

Looking forward, Ukraine-Russia updates, China COVID-19 news and the US Retail Sales for February, expected to ease to 0.4% from 3.8% prior, will direct the GBP/USD moves ahead of the Federal Open Market Committee (FOMC).

Read: Fed Interest Rate Decision Preview: Is history a guide?

Technical analysis

Unless crossing December’s low of 1.3160, GBP/USD remains vulnerable to visit a downward sloping support line from April 2021, around 1.2950 by the press time.