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The British pound is in positive territory, as the US dollar has retreated against the major currencies for the first time in five days. GBP/USD is trading at 1.3169 in the North American session, up 0.52% on the day.

The US dollar has had its way with the pound in recent sessions, but GBP/USD has reversed directions today. We are seeing a buy-the-dip move, which has boosted equities and led to a US bond selloff, with yields falling. The dollar index has fallen sharply to 98.02, down 1.02% and the US dollar outlook is suddenly not looking so bullish.

As goes e, so do the markets

Market direction has been shaped to a great extent by the crisis in e and the markets continue to react as developments unfold. On Thursday, the foreign ministers of  and e are scheduled to meet in Turkey, and if progress is made towards a ceasefire in the fighting, risk appetite would find some traction and we could see a rotation out of US dollars. Conversely, if the talks collapse and  intensifies its attacks, the safe-haven dollar would become more attractive to investors.

The Fed is poised to commence its rate lift-off at next week’s meeting, likely by a quarter-point. What happens after that has become very unclear, with the extreme turbulence we are seeing. There is a full-blown war in Europe, commodity prices are soaring, and oil has rocketed above 120 dollars a barrel. This nasty recipe could lead to stagflation, which means that Fed policymakers will have to show an abundance of caution moving forward – we can expect a slower pace of rate hikes this year than had been anticipated just a few weeks ago.

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GBP/USD Technical

• GBP/USD has broken through resistance at 1.3146. Above, there is resistance at 1.3291


• There is support at 1.3057 and 1.2912