The GBP/USD currency pair is trading below 1.3150 once more. The GBP/USD is recovering in the midst of a risk-off atmosphere. Investors are concerned about the lack of progress on the Russia-Ukraine peace pact. The Bank of England (BoE) hiked interest rates carefully on Thursday.

The GBP/USD pair recovered after falling below 1.3100 on Thursday but lost momentum early Friday. The bearish move in risk sentiment may continue to weigh on the pair ahead of the weekend, dragging it near the 1.3100 support level.

The Bank of England (BOE) raised its policy rate by 25 basis points to 0.75 percent on Thursday, as predicted.

Deputy Governor Jon Cunliffe, on the other hand, voted to keep rates on hold, preventing the British pound from benefiting from the rate increase. Furthermore, the policy statement stated that the Russia-Ukraine situation had “substantially exacerbated the uncertainty around the economic outlook,” and the bank’s cautious tone weighed on the GBP.

If the central bank raises interest rates and is concerned about inflationary threats, the GBP will rise. The Bank of England is also pessimistic or bearish if it maintains or lowers interest rates and has a dovish view of the UK economy.

Market participants may take sanctuary at the end of the day due to increased risks of escalation of the dispute over the weekend. In that event, the dollar may continue to strengthen, causing the GBP/USD to fall.

Conclusion

The gloomy mood in global markets is set to persist into the busy week ahead. Because of the lower low in the last upside wave, the GBP/USD pair may remain bearish for a while, therefore short-medium traders may consider selling.