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GBP/USD Price Forecast: Overall trend appears sideways amid Triangle formation

  • GBP/USD rises to near 1.3375 as the US Dollar corrects sharply.
  • US President Trump sees a total victory over Iran in the next two weeks.
  • Investors await the US CPI data for May and the UK GDP data for April.

The GBP/USD pair trades 0.26% higher at around 1.3375 during the European trading session on Tuesday. The Cable gains as the US Dollar (USD) declines amid expectations that the United States (US) could reach a deal with Iran soon.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the New Zealand Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD-0.12%-0.20%-0.03%-0.14%-0.26%-0.54%-0.20%
EUR0.12%-0.06%0.09%-0.02%-0.11%-0.40%-0.06%
GBP0.20%0.06%0.17%0.06%-0.07%-0.32%0.00%
JPY0.03%-0.09%-0.17%-0.11%-0.22%-0.50%-0.16%
CAD0.14%0.02%-0.06%0.11%-0.11%-0.37%-0.05%
AUD0.26%0.11%0.07%0.22%0.11%-0.26%0.06%
NZD0.54%0.40%0.32%0.50%0.37%0.26%0.32%
CHF0.20%0.06%-0.01%0.16%0.05%-0.06%-0.32%

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).

As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.17% lower to near 99.83.

On late Monday, US President Donald Trump expressed confidence that a “total victory” on Iran can be announced in two weeks, adding it would lead to a sharp decline in oil prices. The statement from Trump came after Iran agreed to halt attacking the Israeli territory, which led to a sharp decline in oil prices.

The US Dollar has outperformed in the past few months as elevated oil prices due to the energy supply crisis prompted the US inflation and hawkish Federal Reserve (Fed) bets.

The appeal of currencies from economies, such as the United Kingdom (UK), which rely heavily on oil imports to meet their energy needs, improves when oil prices start falling.

Going forward, investors will focus on the US Consumer Price Index (CPI) data for May and the UK Gross Domestic Product (GDP) data for April, which will be released on Wednesday and Friday, respectively.

GBP/USD technical analysis

GBP/USD trades higher at around 1.3375 at the press time. However, the near-term tone remains bearish as it holds below the 20-period Exponential Moving Average (EMA), which is at 1.3428. The pair sits between an upward support trend line break around 1.3312 and the reclaimed downward resistance trend line reference at 1.3593, exhibiting a broader sideways trend. The Relative Strength Index (RSI) near 42 leans soft, hinting that downside pressure persists even if not yet overstretched.

On the topside, initial resistance is located at the 20-EMA around 1.3430, and a sustained break above this barrier would open the way toward the former downtrend resistance line reference near 1.3590. On the downside, immediate support emerges at the prior uptrend support break zone around 1.3301, and a drop below there would expose lower levels. The major support area would be the April 7 low at 1.3217, followed by the March 31 low at 1.3159.

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Why is the British Pound struggling when the BoE is considering rate hikes?

The British Pound (GBP) is struggling as mounting political uncertainty and deteriorating economic indicators complicate the United Kingdom’s outlook. Ahead of the key Gross Domestic Product (GDP) April data to be released on Friday, financial markets are balancing the risk of an economic contraction against the probability of further interest rate hikes by the Bank of England (BoE) to rein in energy-driven inflation. 

With internal political friction intensifying due to a high-stakes leadership challenge within the ruling Labour Party, major financial institutions are turning increasingly cautious on the Pound’s near-term trajectory.

GBP/USD daily chart. Source: FXStreet.

Sluggish economic growth and fiscal concerns threaten to drag Pound lower

Macro strategists at Brown Brothers Harriman (BBH) warn that the combination of a potentially contracting UK economy and stagflationary pressures leaves the British Pound deeply exposed to a downward correction against the US Dollar. They emphasize that while anticipated central bank interventions may try to curb price pressures, structural damage to the UK’s fiscal credibility from potential political reshuffling could rapidly worsen a currency undershoot.

We expect GBP/USD to fall to 1.3100, reflecting a stronger US growth outlook relative to the UK. BOE rate hikes in a sluggish growth, high inflation environment, is not bullish for GBP but should help cushion the downside.

Uncertainty over the next BoE moves

Economists at Societe Generale suggest that any near-term political noise surrounding Manchester Mayor Andy Burnham’s bid for the Labour leadership will likely yield limited radical change. On the monetary front, they acknowledge that while hawkish voices within the BoE’s Monetary Policy Committee (MPC) are pushing hard for an immediate rate increase, the broader consensus will likely favor a more conservative wait-and-see strategy.

We expect these members [those opting for a rate hike] to remain in the minority and for the BoE to keep rates on hold in June.

Banks anticipate a downward-biased trajectory for the British Pound

The banks anticipate a soft trend for the British Pound. Brown Brothers Harriman maintains an explicitly bearish outlook, forecasting a drop to the 1.3100 mark for the GBP/USD

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British Pound: Growth risks and politics weigh against US Dollar – BBH

Brown Brothers Harriman’s Elias Haddad (BBH) highlights downside risks for the Pound as UK GDP is expected to contract in Q2 and markets price further Bank of England (BoE) hikes due to second-round inflation effects. Haddad forecasts GBP/USD lower and warns that domestic politics, including the Makerfield by-election and potential leadership challenges, could exacerbate any Pound undershoot.

Soft growth and political risk pressure Sterling

“UK April GDP is due Thursday. Real GDP is expected to fall -0.1% m/m vs. +0.3% in March and track below the Bank of England’s (BOE) baseline Q2 forecast of +0.1% q/q. PMI data indicate UK real GDP could contract by -0.2% q/q in Q2.”

“Nevertheless, the swaps curve implies 64bps of BOE rate hikes to between 4.25% and 4.50% in the next twelve months because of upside risk to second-round effects in price and wage-setting stemming from the energy shock. A first full 25bps BOE rate rise is priced-in for the September 17 meeting.”

“We expect GBP/USD to fall to 1.3100, reflecting a stronger US growth outlook relative to the UK. BOE rate hikes in a sluggish growth, high inflation environment, is not bullish for GBP but should help cushion the downside.”

“The UK political backdrop can amplify a GBP undershoot. Attention is increasingly shifting to the June 18 Makerfield by-election.”

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GBP holds losses below 1.3350 amid Middle East turmoil

  • GBP/USD posts modest losses near 1.3340 in Monday’s early European session. 
  • Intensified geopolitical tensions in the Middle East weigh on the British Pound. 
  • BoE’s Bailey signaled the central bank is in “no rush” to raise interest rates.

The GBP/USD pair trades with mild losses around 1.3340 during the European trading hours on Monday. Ongoing tensions in the Middle East and rising bets of a US interest rate hike provide some support to the US Dollar (USD) against the British Pound (GBP). 

The BBC reported on Monday that the Israel Defense Forces (IDF) said that it struck military targets in western and central Iran, hours after Iran fired a salvo of missiles at northern Israel. Iranian officials said that any attack from Israel against Lebanon or Iran would be met with a “crushing and comprehensive response.” 

Additionally, Iran’s ambassador to Moscow, Kazem Jalali, said that the Strait of Hormuz will be open but under new conditions to be set by Iran and Oman, including a transit fee, per Reuters. Escalating tensions in the Middle East could boost a safe-haven currency such as the Greenback and act as a headwind for the major pair in the near term. 

The US economy posted a third straight month of strong job gains in May, with the US Nonfarm Payrolls (NFP) rising by 172K in May, the Bureau of Labor Statistics reported on Friday. This figure followed the 179K increase (revised from 115K) and was better than the forecast of 85K. This robust jobs data has reignited expectations that the Fed may raise the interest rate later this year, lifting the USD. 

On the UK’s front, Bank of England (BoE) governor Andrew Bailey delivered dovish remarks, saying that the UK central bank is in no rush to raise interest rates while the outcome of the Iran war remains uncertain and the UK’s growth rate stays weak. 

Financial markets had expected the BoE to cut interest rates twice this year to 3.25%. Since the US-Iran war began, the situation has reversed, and now a rise of 25 basis points (bpd) before December is forecast, according to CNBC. 

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GBP steadies as increased risk aversion offsets hawkish BoE tone

  • GBP/USD stays calm as a firm US Dollar draws safe-haven support from stalled US-Iran peace talks and Middle East tensions.
  • Closing the Strait of Hormuz raises energy prices and inflation, keeping Fed interest rates higher for longer.
  • BoE’s Megan Greene grew hawkish, backing faster rate hikes because response speed is as vital as size.

GBP/USD moves little following a four-day winning streak, trading around 1.3470 during the Asian hours on Wednesday. The pair steadies as the US Dollar (USD) remains firm, driven by stalled US-Iran peace negotiations and renewed tensions in the Middle East, continued to underpin safe-haven demand.

Iran launched ballistic missiles toward neighboring Kuwait and Bahrain. The United States Central Command (CENTCOM) said on Tuesday that it had intercepted and defeated a series of Iranian missile and drone attacks targeting regional neighbors, including Kuwait and Bahrain, while also carrying out self-defence strikes on Iran’s Qeshm Island, per ABC News.

A prolonged closure of the Strait of Hormuz threatens to drive energy prices higher and intensify global inflationary pressures, reinforcing expectations that the Federal Reserve (Fed) will maintain elevated interest rates for an extended period.

This higher-for-longer outlook is heavily supported by a resilient US economy, highlighted by the ISM Manufacturing PMI climbing to 54 in May 2026, up from 52.7 in the prior two months and beating forecasts to mark the strongest factory expansion since May 2022.

Further evidence of economic strength appeared in the labor market, where April JOLTS data showed Job Openings surging to a nearly two-year high of 7.6118 million alongside declining layoffs. With robust manufacturing and employment data complicating the inflation outlook, investors are now anxiously awaiting Friday’s Nonfarm Payrolls report for definitive clues on the future trajectory of monetary policy.

Bank of England (BoE) policymakers maintained a firm stance on inflation. Policymaker Megan Greene delivered hawkish remarks, signaling a growing justification for interest rate hikes and emphasizing that “the speed of the response is arguably just as important as its size.” Her comments follow statements from BoE Governor Andrew Bailey, who stressed the importance of public confidence in the central bank’s commitment to returning inflation to its 2% target.

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Euro consolidates losses against the British Pound despite high inflation figures

  • EUR/GBP inches up from 0.8639 lows but remains capped below 0.8650 on Tuesday.
  • The Euro has been little moved by the hot Eurozone inflation levels released earlier on the day.
  • The Pound maintains a bid tone as UK politics jump into the back seat.

The Euro (EUR) remains vulnerable against the British Pound (GBP) on Tuesday, capped below 0.8650, consolidating losses from the previous two trading days. The hotter Eurozone inflation figures have failed to provide any significant support to the Euro, as they do not alter the view that the European Central Bank (ECB) will hike rates next week.

Preliminary data released by Eurostat on Tuesday revealed that the Eurozone Harmonised Index of Consumer Prices (HICP) accelerated to a 3.2% year-on-year (YoY) growth in May, in line with market expectations, from 3.0% (YoY) in April. Likewise, the core HICP rose to a one-year high of 2.5% in the 12 months to May, up from 2.2% in April, above market expectations of a 2.4% increase.
The data confirms the inflationary impact of the energy shock stemming from Iran’s war, while the increase in core inflation suggests that price pressures are spilling through the broader economy, adding pressure on households and businesses. This practically confirms a 25-basis-point rate hike at next week’s monetary policy meeting.

The Sterling, on the other hand, is showing some strength as Prime Minister Keir Starmer seems to have withstood calls to resign, following the disastrous result in May’s local elections, which eases concerns about a void of power, at least for now.

Earlier on Tuesday, Consumer Credit eased to GBP 1.86 billion in April from the upwardly revised GBP1.90 billion in March, with Mortgage approvals increasing to 65.94K from 63,97 K in March against market expectations of a moderate decline. Net Lending to Individuals fell to GBP 6.2 billion in April from GBP 8.7 billion in March. The Pound, however, was little moved after these figures.

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British Pound nudges higher as traders await progress on Middle East peace talks

  • GBP/USD posts modest gains near 1.3460 in Tuesday’s Asian session. 
  • The potential upside for the pair might be limited as the status of Iran’s peace talks remains unclear. 
  • US ISM Manufacturing PMI rose to 54 in May, stronger than expected.  

The GBP/USD pair trades in positive territory around 1.3460 during the Asian trading hours on Tuesday. However, renewed tensions in the Middle East might cap the upside for the major pair as Iran has reportedly withdrawn from negotiations with the US. Traders will closely monitor the developments surrounding Middle East peace talks.

Iran’s state media said Tehran on Monday had suspended talks over Israel’s actions in Lebanon. Separately, US President Donald Trump stated that he believes an agreement to reopen the Strait of Hormuz and extend the ceasefire with Iran is reachable “over the next week.” Mixed signals and uncertainty in the Middle East could boost a safe-haven currency such as the Greenback and create a headwind for the major pair in the near term. 

Data released by the Institute for Supply Management (ISM) on Monday showed that the US Manufacturing Purchasing Managers’ Index (PMI) rose to 54 in May from 52.7 in April. This figure came in better than the market expectation of 53.0.

On the UK’s front, BoE governor Andrew Bailey said on Friday that the UK central bank is in no rush to raise interest rates while the outcome of the Iran war remains uncertain and the UK’s growth rate stays weak. Money market futures now imply 32 basis points (bps) of tightening this year, one quarter-point hike, and roughly a 30% chance of a second, according to Reuters. 

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Euro holds losses against British Pound after Germany’s Retail Sales data

  • EUR/GBP softens to around 0.8655 in Monday’s early European session. 
  • German Retail Sales declined by 0.3% MoM in April. 
  • BoE’s Bailey signalled there was no urgency to raise interest rates.

The EUR/GBP cross trades in negative territory near 0.8655 during the early European trading hours on Monday. The Euro (EUR) remains weak against the British Pound (GBP) following the upbeat German Retail Sales data. The preliminary reading of the Harmonized Index of Consumer Prices (HICP) from the Eurozone will be released on Tuesday. 

Data released by Destatis on Monday showed that German Retail Sales, a key measure of consumer spending, fell 0.3% MoM in April. This figure followed a fall of 0.3% (revised from -2.0%) and came in better than the market expectation of a 0.4% decrease. 

On an annualized basis, Retail Sales dropped 0.3% in April, versus the prior release of a 0.2% decline (revised from -2.0%). The German economic data fails to boost the EUR in an immediate reaction.   

On the UK’s front, BoE governor Andrew Bailey said on Friday that the UK central bank is in no rush to raise interest rates while the outcome of the Iran war remains uncertain and the UK’s growth rate stays weak.  “We have to monitor the situation in the Middle East and how it affects the UK economy and inflation very closely and adjust policy as required,” said Bailey. 

Money market futures now imply 32 basis points (bps) of tightening this year, one quarter-point hike, and roughly a 30% chance of a second, according to Reuters.