Currency Hedger No Comments

GBP steadies above 1.3400 vs USD on mixed BoE cues, UK political and Iran risks

  • GBP/USD struggles to gain any meaningful traction on Friday amid mixed fundamental cues.
  • UK political uncertainty counters BoE rate hike bets and keeps the GBP bulls on the defensive.
  • Geopolitical risks and hawkish Fed expectations underpin the USD, keeping a lid on the pair.

The GBP/USD pair is seen oscillating in a narrow trading band during the Asian session on Friday, though it remains on track to register modest weekly gains. Spot prices remain capped near the 100-day Exponential Moving Average (EMA) and currently trade around the 1.3425-1.3430 region, nearly unchanged for the day.

The British Pound (GBP) has been struggling to attract any meaningful buyers amid mixed signals over the Bank of England’s (BoE) policy outlook and the UK political uncertainty. In fact, Swati Dhingra, an external MPC member, said that the BoE might not need to raise rates if its “scenario ​B” – where higher energy prices have only moderate second-round effects – materialises. In contrast, fellow external member Catherine Mann warned that high inflation in late 2026 could become embedded in wage deals for 2027.

Meanwhile, BoE Governor Andrew Bailey said on Wednesday that a rise in market interest rates since the start of the Iran war has given the central bank more time to assess the ​economic impact of the conflict. Nevertheless, markets are still pricing in the possibility of at least one interest rate hike by the BoE in 2026. The GBP bulls, however, seem hesitant amid serious leadership challenges to UK Prime Minister Keir Starmer. This, along with a bullish US Dollar (USD), contributes to keeping a lid on the GBP/USD pair.

Despite the incoming positive headlines, investors remain skeptical about a US-Iran peace deal amid major disagreements over Tehran’s nuclear program and a standoff over the critical Strait of Hormuz. In fact, the Islamic Republic’s Supreme Leader, Mojtaba Khamenei, stated that Iran’s uranium enrichment and Tehran’s control over the strategic waterway remain major sticking points in the negotiations. This, along with hawkish US Federal Reserve (Fed) expectations, underpin the USD and cap the GBP/USD pair.

Minutes from the April 28–29 FOMC meeting released on Wednesday revealed that a majority policymakers believe that policy firming would likely become appropriate if inflation continued to run persistently above the 2% target. Traders were quick to react and are now pricing in around a 60% chance that the US central bank will raise borrowing costs by the year-end. This, in turn, assists the USD in preserving its recent strong gains to a six-week high and warrants some caution for the GBP/USD bulls.

US Dollar Price This week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Canadian Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.10%-0.76%0.21%0.29%0.17%-0.46%0.05%
EUR-0.10%-0.87%0.18%0.17%0.05%-0.49%-0.07%
GBP0.76%0.87%1.00%1.05%0.93%0.38%0.78%
JPY-0.21%-0.18%-1.00%0.03%-0.11%-0.72%-0.19%
CAD-0.29%-0.17%-1.05%-0.03%-0.13%-0.75%-0.27%
AUD-0.17%-0.05%-0.93%0.11%0.13%-0.55%-0.06%
NZD0.46%0.49%-0.38%0.72%0.75%0.55%0.40%
CHF-0.05%0.07%-0.78%0.19%0.27%0.06%-0.40%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Currency Hedger No Comments

British Pound: Rebound on easing fiscal and inflation fears – MUFG

MUFG’s Lee Hardman highlights a strong recovery in the Pound and gilts as UK fiscal and inflation concerns ease. GBP/USD has bounced toward the 200-day moving average, while long gilt yields have fallen sharply. Softer UK CPI and weakening labour market data have reduced expectations for Bank of England rate hikes, though MUFG still sees downside risks for the Pound from energy and political uncertainty.

Pound recovery faces lingering downside risks

“The pound and gilts have staged an impressive rebound this week driven both by a reduction in fears over UK fiscal and inflation risks. After hitting a low of 1.3303 on 18th May, cable has risen back up towards the 200-day moving average at around 1.3420.”

“The spokesperson stated that Andy Burnham plans to stick the government’s current fiscal rules which would curtail room to loosen fiscal policy if he becomes prime minister. The policy “u-turn” helps to ease downside risks for the pound and gilts in the near-term.”

“The report revealed a much larger than expected drop in core and services inflation helping to ease some concerns over the risk of more persistent inflation in the UK. It provides some reassuring news that underlying inflation was continuing to slow before the energy price shock hits harder heading into the summer.”

“In response to the softer CPI report, the UK rate market has moved to scale expectations for BoE rate hikes. The timing of the first rate hike has been pushed out until July or September, and there are only around 50bps of hikes priced in by year end.”

“Overall, the latest developments leave the pound on a stronger footing in the near-term but we still judge that risks remain tilted to the downside. The ongoing fallout from the energy price shock and lingering UK political uncertainty continue to pose downside risk for the pound.”

Currency Hedger No Comments

GBP trades flat as cooling UK inflation, Iran tensions cap upside

  • GBP/USD flatlines near 1.3435 in Thursday’s Asian session. 
  • The headline UK CPI slowed sharply to 2.8% YoY in April from 3.3% in March, missing the forecast.
  • Trump said negotiations with Iran are in the final stages but warned of attacks if the deal fails.

The GBP/USD pair holds steady around 1.3435 during the Asian trading hours on Thursday. However, a sharp slowdown in UK inflation and uncertainty surrounding US–Iran talks could weigh on the British Pound (GBP) against the US Dollar (USD). Traders await the preliminary readings of the Purchasing Managers’ Index (PMI) for May from the UK and the US, which are due later on Thursday. 

The UK headline Consumer Price Index (CPI) inflation eased to 2.8% over the year in April from 3.3% in March, the Office for National Statistics (ONS) showed on Wednesday. This figure came in softer than the expectation of 3.0%. Additionally, the core CPI, excluding volatile food and energy items, rose 2.5% year-over-year in April, versus 3.1% prior and below the market consensus of 2.6%. 

This UK inflation data, combined with an unexpected rise in the Unemployment Rate to 5.0%, prompted traders to scale back expectations for future Bank of England (BoE) rate hikes by December. UK rate futures pointed to around 52 basis points (bps) of BoE policy tightening by December, versus about 60 bps on Tuesday, according to Reuters. 

US President Donald Trump said on Wednesday that negotiations with Iran were in the final stages, while warning of further attacks unless Iran agrees to a deal. Meanwhile, Iranian President Masoud Pezeshkian stated that Tehran was not on the brink of giving in and threatened to retaliate for any strikes with attacks beyond the Middle East. Ongoing tensions between the US and Iran could lift the Greenback and act as a headwind for the major pair in the near term. 

Currency Hedger No Comments

GBP seems vulnerable near 1.3300 vs USD on Iran tensions, UK political turmoil

  • GBP/USD attracts sellers for the fifth consecutive day amid a combination of negative factors.
  • Rising Fed rate hike bets and renewed US-Iran tensions benefit the USD’s safe-haven status.
  • The UK political turmoil undermines the GBP and exerts additional pressure on spot prices.

The GBP/USD pair adds to last week’s heavy losses and remains under some selling pressure for the fifth consecutive day on Monday. Spot prices drop to the 1.3300 mark, or the lowest level since April 8, during the Asian session and seem vulnerable amid a broadly firmer US Dollar (USD).

Against the backdrop of rising bets for an interest rate hike by the Federal Reserve (Fed) in 2026, the risk of a further escalation of geopolitical tensions in the Middle East continues to underpin the safe-haven Greenback. In fact, US President Donald Trump warned Iran that the “clock is ticking” and that there “won’t be anything left” if action is not taken soon, adding that “time is of the essence.” Adding to this, the Times of Israel reported on Saturday that Israel and the US are actively advancing military preparations to potentially resume coordinated attacks against Iran.

Furthermore, major disagreements over Iran’s nuclear program and the Strait of Hormuz dampen hopes for a peace deal, lifting Crude Oil prices to a two-week top. This revives inflationary concerns and bolsters market expectations for a more hawkish Fed. According to the CME Group’s FedWatch Tool, traders are now pricing over a 50% chance that the US central bank will raise borrowing costs by the end of this year. The outlook, in turn, remains supportive of elevated US Treasury bond yields and further benefits the USD, which is seen weighing on the GBP/USD pair.

The British Pound (GBP), on the other hand, is pressured by domestic political uncertainty amid calls for UK Prime Minister Sir Keir Starmer to step down, following the ruling Labour Party’s hefty losses in the recent local elections. Moreover, UK Health Minister Wes Streeting’s resignation last Thursday points to a deepening crisis within the party, which, in turn, backs the case for a further near-term depreciating move for the Sterling and the GBP/USD pair.

Moving ahead, traders this week will confront the release of important UK macro releases, starting with monthly employment details on Tuesday. This will be followed by the latest consumer inflation figures on Wednesday, which will play a key role in influencing expectations about the Bank of England’s (BoE) interest rate path and provide some meaningful impetus to the GBP. The fundamental backdrop, however, seems tilted in favor of the GBP/USD bears.

Currency Hedger No Comments

British Pound hovers ahead of UK GDP data, awaits Trump-Xi meeting updates

  • GBP/USD steadies as traders await preliminary Q1 UK Gross Domestic Product data due on Thursday.
  • Traders also await further news on the ongoing Trump-Xi meeting in Beijing.
  • US wholesale inflation reached a post-2022 peak in April, as the Producer Price Index surged to a 6.0% annual rate.

GBP/USD holds ground following three days of losses, trading around 1.3520 during the Asian hours on Thursday. Traders await the preliminary UK Gross Domestic Product (GDP) for the first quarter of 2026, along with Industrial and Manufacturing Production data due later in the day.

The GBP/USD pair holds ground as the US Dollar (USD) remains firm on market caution as traders await further updates amid the ongoing meeting between US President Donald Trump and Chinese President Xi Jinping in Beijing. Traders will also shift their focus to the US Retail Sales report for April due later in the day.

As the world’s two largest economies attempt to stabilize their relationship, they are reportedly considering a framework to reduce tariffs on roughly $30 billion worth of goods, excluding those tied to national security.

However, geopolitical tensions remain a major factor. The US-China summit has taken place against the backdrop of the war in Iran. Washington has recently increased pressure on Tehran by imposing new sanctions on entities involved in selling Iranian oil to China and threatening banks that facilitate those transactions.

The US Bureau of Labor Statistics reported on Wednesday that wholesale inflation hit its highest level since late 2022. The Producer Price Index (PPI) surged to 6.0% year-over-year in April, up from 4.3% in March and well above the 4.9% expected by the market. On a monthly basis, PPI rose 1.4%, doubling the previous month’s 0.7% and far exceeding the anticipated 0.5% increase.

Currency Hedger No Comments

GBP/USD Forecast – Holds modest upside while staying anchored above 100-day EMA support

  • GBP/USD trades with mild gains near 1.3550 in Wednesday’s early European session. 
  • The positive outlook of the pair remains intact above the key 100-day EMA. 
  • The immediate resistance level is seen at 1.3630; the initial support level is located at 1.3540. 

The GBP/USD pair trades on a positive note around 1.3550 during the early European trading hours on Wednesday. Nonetheless, the potential upside for the major pair might be limited, as UK political turmoil and ongoing tensions in the Middle East could weigh on the British Pound (GBP) against the Greenback. 

UK Prime Minister Keir Starmer is facing rising pressure to set a date for his departure after elections across much of the country resulted in massive losses for his ruling Labour Party. While Starmer stated he will not resign, the resulting political “noise” and rising UK gilt yields have created localized pressure on the GBP. 

Traders will closely watch the US Producer Price Index (PPI) report, which is due later on Wednesday. Markets expect the US PPI inflation to rise to 4.9% YoY in April from 4.0% in March. The core PPI, excluding volatile food and energy prices, is expected to show a rise of 4.3% YoY in April versus 3.8% prior. If the report shows a hotter-than-expected outcome, this could boost the US Dollar (USD) and create a headwind for the major pair. 

Chart Analysis GBP/USD

Technical Analysis:

In the daily chart, GBP/USD holds a mild bullish bias as spot remains above the 20-day Bollinger simple moving average (SMA) and comfortably over the 100-day SMA, suggesting underlying dip-buying interest. The Relative Strength Index (RSI) hovers close to the mid-50s, hinting at steady rather than overstretched upside momentum while price grinds higher within the Bollinger envelope.

On the topside, immediate resistance emerges at the upper Bollinger band near 1.3630, where recent rallies could stall if buyers fail to extend the breakout. On the downside, initial support is seen at the 20-day Bollinger SMA around 1.3540, followed by the 100-day SMA at roughly 1.3483; a deeper pullback would then look to the lower Bollinger band near 1.3458 as a stronger floor.

Currency Hedger No Comments

Sterling slips from peak as US CPI and UK GDP loom

  • US April CPI on Tuesday is forecast at 0.6% MoM and 3.7% YoY, with a hotter print likely to weigh on Sterling.
  • Thursday’s UK Q1 GDP, consensus 0.6% QoQ, is the only domestic release with real potential to drive Sterling this week.
  • Iran-US clashes flared again over the weekend, with the Strait of Hormuz shut and global energy supply risk elevated.

Sterling pulled back from a fresh peak near 1.3650 on Monday, easing close to 1.3610 through European trade after the Asian session squeezed the Pound to a new local high. The rejection from the 1.3650 area produced a sharp intraday reversal, with a string of red candles unwinding most of the overnight push and pointing to fading upside momentum ahead of a heavy data week.

The week ahead is a US-heavy affair: Tuesday’s April Consumer Price Index (CPI) is the centerpiece, with consensus penciling in 0.6% MoM and 3.7% YoY headline alongside a 0.4% MoM, 2.7% YoY core read, in part reflecting the first full month of Iran-conflict energy pass-through. Wednesday’s Producer Price Index (PPI) print is forecast hotter again at 0.5% MoM and 4.9% YoY, with Thursday’s Retail Sales penciled at 0.5% MoM. A heavier Federal Reserve speaking calendar bookends each release, with Williams, Goolsbee, Kashkari, Schmid, Hammack, and Barr all scheduled, leaving the US Dollar exposed to two-way risk on every print and every headline. A hotter-than-expected CPI in particular would underline how Strait of Hormuz disruption is feeding through to US prices and tend to weigh on Sterling.

On the UK side, the calendar is thin. Thursday’s release block, headlined by the Q1 Gross Domestic Product (GDP) preliminary print at 0.6% QoQ and 0.8% YoY consensus alongside the March monthly read forecast at minus 0.2% MoM, is the only domestic catalyst with real potential to move Sterling. An upside surprise would help the Pound break free of its consolidation, while a softer set would deepen the stagflation narrative that has built since UK March CPI ran at 3.3% YoY. Bank of England (BoE) commentary from Greene on Monday and Mann on Wednesday will fill the gaps but is unlikely to drive direction. Fresh Iran-US clashes over the weekend, with the Strait of Hormuz still shut and Washington’s reopening proposal awaiting an Iranian response, continue to set the macro tone, while reported internal Labour pressure on Prime Minister Keir Starmer adds a modest political risk premium on the Pound that a soft GDP print would only widen.

GBP/USD 15-minute chart

Chart Analysis GBP/USD

Technical Analysis

In the fifteen-minute chart, GBP/USD trades at 1.3609. The pair holds a mild intraday bullish bias as it sits above the daily open at 1.3584, keeping the latest rebound intact despite the lack of nearby moving average references. However, the Stochastic RSI has recently shifted from overbought extremes toward the lower end of its range, hinting that upside momentum is cooling after the earlier advance.

On the downside, immediate support is seen at the daily open level around 1.3584, where buyers may look to defend the broader intraday up-move. A sustained break below this floor would weaken the constructive tone and expose deeper pullbacks, while holding above it would keep the short-term bias tilted to the upside even as momentum indicators stay in a corrective phase.

In the daily chart, GBP/USD trades at 1.3611 with a bullish near-term bias, as spot holds above both the 50-day and 200-day exponential moving averages (EMAs). The pair has extended its advance away from these reclaimed trend filters, suggesting underlying demand remains in control, while the Stochastic RSI around 61 indicates positive but not overstretched momentum, leaving room for further gains if buyers stay in charge.

On the topside, immediate support-turned-reference now comes from the 50-day EMA at 1.3480, followed by the 200-day EMA near 1.3399, which together mark a broader demand band on any corrective pullback. As long as daily closes remain above these EMAs, the technical backdrop would continue to favor dip-buying strategies over a deeper reversal.

Currency Hedger No Comments

British Pound – Political risks drags against Euro – ING

ING’s Chris Turner notes Sterling is softening after UK local elections, as Labour’s losses fuel talk of a leadership contest and a leftward policy shift. He highlights the risk of developments around Manchester Mayor Andy Burnham re-entering parliament. Turner says markets will focus on Prime Minister Keir Starmer’s policy speech and expects EUR/GBP to revisit the overnight high at 0.8675.

Sterling pressured by Labour uncertainty

“Sterling is softening a little as markets digest the fall-out from local UK elections held late last week. While Labour losses were not quite as bad as feared, they have failed to quell speculation over a Labour leadership contest and a clear leftward drift in government policy.”

“Manchester Mayor Andy Burnham remains waiting in the wings and the markets will react to any news such as Burnham resigning as mayor or a sitting Labour MP resigning to make way for Burnham’s return to parliament.”

“The key focus this morning will be a policy speech from PM Keir Starmer on how he plans to address Labour’s falling popularity and take the party into the next election. The wild card here is how far he intends to embrace a return to Europe, whether that be rejoining the customs union or more controversially, the single market. “

“It will be tough for Starmer to win over his critics, and we suspect EUR/GBP finds its way back to the overnight high at 0.8675.”