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GBP/USD Consolidates around mid-1.3400s amid firm USD, cautious setup

  • GBP/USD lacks any firm intraday directional bias and oscillates in a narrow range on Monday.
  • Geopolitical uncertainties and hawkish Fed expectations underpin the USD, capping spot prices.
  • The technical setup, too, warrants some caution before positioning for any meaningful upside.

The GBP/USD pair struggles to capitalize on its goodish recovery from a one-and-a-half-week low, touched last Thursday, and oscillates in a narrow range around mid-1.3400s at the start of a new week. The US Dollar (USD) regains some positive traction amid the uncertainty over a potential US-Iran peace deal and hawkish US Federal Reserve (Fed) bets. This, in turn, is seen as a key factor acting as a headwind for spot prices.

The British Pound (GBP), on the other hand, is undermined by expectations for a delayed rate hike from the Bank of England (BoE), especially after softer inflation figures and an unexpected rise in the Unemployment Rate. Traders, however, opt to wait for this week’s important US macro releases and BoE Governor Andrew Bailey’s appearances before positioning for the next leg of a directional move for the GBP/USD pair.

From a technical perspective, spot prices hold a capped tone below the 200-period Simple Moving Average (SMA) on the 4-hour chart, which should continue to act as overhead supply. However, the rising trend-line support around 1.3356 underpins the broader advance. Meanwhile, momentum indicators are mildly constructive, yet signaling at stabilizing downside pressure rather than a decisive bullish shift for the GBP/USD pair.

In fact, the Relative Strength Index (RSI) is hovering above the 50 line, while the Moving Average Convergence Divergence (MACD) is marginally positive. This, in turn, suggests that any subsequent move up is more likely to confront stiff resistance near the 1.3500 psychological mark (200-period SMA). A sustained move above this barrier would be needed to reopen the path toward higher highs.

On the downside, the next notable support aligns with the prior uptrend support line around 1.3356, where buyers would be expected to emerge on a deeper pullback. A convincing break below that zone would suggest a more meaningful deterioration of the medium-term bullish structure.

(The technical analysis of this story was written with the help of an AI tool.)

GBP/USD 4-hour chart

Chart Analysis GBP/USD

US Dollar Price Today

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

USDEURGBPJPYCADAUDNZDCHF
USD0.09%-0.05%0.13%0.07%-0.03%0.31%0.27%
EUR-0.09%-0.12%0.00%-0.02%-0.07%0.23%0.17%
GBP0.05%0.12%0.15%0.11%-0.01%0.33%0.28%
JPY-0.13%0.00%-0.15%-0.03%-0.14%0.21%0.14%
CAD-0.07%0.02%-0.11%0.03%-0.11%0.23%0.18%
AUD0.03%0.07%0.00%0.14%0.11%0.29%0.28%
NZD-0.31%-0.23%-0.33%-0.21%-0.23%-0.29%-0.05%
CHF-0.27%-0.17%-0.28%-0.14%-0.18%-0.28%0.05%

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).

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Pound Slumps Over 1% in May

The pound was trading around $1.342 at the end of May, set for a monthly loss of over 1% against the USD. The decline came amid a mix of rising political uncertainty, following UK Prime Minister Keir Starmer’s Labour Party defeat in local elections, and ongoing US-Iran negotiations to end the three-month war, which has contributed to global inflation pressures. A tentative deal to extend the ceasefire by 60 days remains pending President Donald Trump’s approval. The UK’s economic challenges, including its lack of tech stocks, heavier reliance on oil, and overall pessimism about growth, have added to the currency’s struggles, as has its vulnerability to energy shocks. On the monetary policy front, investors have slightly scaled back expectations for further Bank of England rate hikes this year, as oil prices eased from four-year highs and recent UK data pointed to a cooling labor market, softer-than-expected inflation, and signs of moderating economic activity.

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GBP recovers against US Dollar; outlook remains weak due to Iran worries

  • The British Pound recovers almost half of its early losses against the US Dollar.
  • Middle East tensions re-escalate due to the exchange of attacks between the US and Iran.
  • 10-year UK gilt yields have remained lower in the past few weeks due to easing hawkish BoE bets.

The British Pound claws back half of its early losses and rebounds to near 1.3400 against the US Dollar (USD) during the European trading session on Thursday from the intraday low of 1.3367. The recovery move in the GBP/USD pair appears to be short-lived as Middle East conflicts have re-escalated.

At press time, S&P 500 futures and Asian stock markets have also recovered significantly. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, retreats from its intraday high of 99.54, but is still 0.18% higher to near 99.40. A slight correction in the WTI Oil price has also been observed from the day’s high of $91.17 to near $90.14.

Geopolitical tensions in the Gulf region have been reignited due to the exchange of attacks between the United States (US) and Iran. Earlier in the day, Iran’s Islamic Revolutionary Guard Corps (IRGC) said that it attacked US military bases in retaliation against Washington’s strikes near Bandar Abbas airport.

This was the second attack by the US this week after the so-called “defensive strikes” on Iranian boats deploying mines and their missile launching sites.

Meanwhile, United Kingdom (UK) gilt yields have also recovered strongly after a weak opening due to Middle East concerns. 10-year UK gilt yields have rebounded to near 4.87% from the day’s low of 4.81%.

UK gilt yields have been declining in the past few weeks due to easing hopes of a near-term Bank of England (BoE) interest rate hike. Traders have pared hawkish BoE bets lately due to weakening job market conditions and lower household spending.

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Euro hesitates above 0.8650 against the British Pound as Middle East tensions rise

  • EUR/GBP struggles to extend gains beyond 0.8660 but remains steady above 0.8650.
  • Risk appetite has faltered on Thursday as the US and Iran exchange attacks.
  • ECB-BoE monetry policy divergence keeps the pair buoyed.

The Euro (EUR) is trading flat against the British Pound (GBP) on Thursday. EUR/GBP bulls are struggling to find acceptance above 0.8660 following a 0.4% rally over the previous two days, although downside attempts remain contained above 0.8655 so far.

Speculative demand for the common currency is faltering on Thursday as market sentiment sours and Oil prices jump with tensions between the US and Iran escalating again.

The US military launched fresh strikes on Iranian military sites in the province of Bandar Abbas that, according to the US Central Command (Centcom), “posed a threat around the Strait of Hormuz.” Iran’s Islamic Revolutionary Guard Corps (IRGC) affirmed that they targeted US bases in the Gulf region, and Kuwait authorities reported interceptions of hostile drone and missile attacks.

ECB-BoE monetary policy divergence

The Euro, however, remains fairly steady, favoured by monetary policy divergence between the European Central Bank (ECB) and the Bank of England (BoE). Futures markets are pricing a 91% chance that the ECB will hike interest rates at its June 11 meeting, according to data by the ECB Watch Tool. The BoE, on the contrary, is not expected to tighten its monetary policy anytime soon.

The ECB Chief Economist, Philip Lane, warned on Thursday that inflationary consequences from the US-Iran war will outlast the conflict and that the bank must prevent the general belief that inflation will remain high for a long time to take hold.

Later on Thursday, ECB President Christine Lagarde is expected to take part in a central bankers’ meeting, and her comments on monetary policy will be listened to with particular interest.

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GBP softens to near 1.3400 as US-Iran tensions boost safe-haven US Dollar

  • GBP/USD loses momentum to around 1.3400 in Thursday’s early Asian session. 
  • US military carried out new strikes in Iran; Trump said he won’t rush into a deal with Tehran. 
  • Traders reduce their bets on BoE rate hikes due to easing concerns about political developments and softer UK data. 

The GBP/USD pair attracts some sellers near 1.3400 during the Asian trading hours on Thursday. The British Pound (GBP) weakens against the US Dollar (USD) on fresh geopolitical developments. Markets remain cautious ahead of the release of the US April Personal Consumption Expenditures (PCE) Price Index inflation report, which is due later in the day. 

The US military carried out new strikes in Iran, targeting a site that posed a threat to US forces and commercial traffic, according to Reuters. The US described the actions as measured, purely defensive, and intended to maintain the ceasefire. 

On Wednesday, President Donald Trump vowed to reach a favorable deal to end the war with Iran, warning that the regime’s efforts to bore him with waiting will not work because “I don’t care about the midterm elections.” Rising tensions and signs of a prolonged conflict 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. 

Markets have scaled back expectations for a rate hike from the Bank of England (BoE) following softer inflation data, an unexpected rise in the Unemployment Rate to 5.0% for April, and easing political concerns.  

“Traders now price one rate hike fewer in 2026 than at the end of the previous week, and gilt yields saw the biggest weekly drop since late-2023,” Pantheon Macroeconomics said in a note on Tuesday. “We estimate that lower yields were driven by lower oil prices, a fall in betting-market odds on Sir Keir Starmer being replaced, and Andy Burnham committing to maintain current fiscal rules,” they added. 

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Pound Little-Changed Amid Middle East Optimism

The pound held steady at $1.344 as investors awaited Middle East developments amid optimism over a potential US-Iran peace deal and diminishing expectations for Bank of England rate hikes. Investors remain focused on the region, heartened by the recent lack of negative signals from both sides and lingering hopes that an agreement to ease tensions and reopen the Strait of Hormuz remains possible despite recent strikes. Traders have trimmed their bets on BoE rate hikes, now expecting about 40 basis points of tightening by year-end, with a roughly 50% chance of a hike next month. Attention now turns to upcoming BoE policymaker speeches for monetary policy signals and political developments around Prime Minister Keir Starmer following Labour’s regional election setbacks.

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British Pound remains close to monthly peak vs Japanese Yen amid Mideast tensions

  • GBP/JPY regains positive traction on Wednesday and draws support from a combination of factors.
  • A modest USD downtick benefits the GBP, while economic concerns due to Iran risks weigh on the JPY.
  • Bulls seem rather unaffected by divergent BoJ-BoE expectations and JPY intervention speculations.

The GBP/JPY cross attracts some dip-buyers following the previous day’s modest pullback from the 214.65-214.70 region, or a fresh monthly peak, and sticks to its modest intraday gains through the early European session on Wednesday. Spot prices currently trade around the 214.35-214.40 area, up 0.10% for the day, and seem poised to appreciate further amid a supportive fundamental backdrop.

The British Pound (GBP) benefits from a modest US Dollar (USD) downtick, which, along with the underlying bearish sentiment surrounding the Japanese Yen (JPY), validates the near-term positive outlook for the GBP/JPY cross. In fact, the JPY has been underperforming against major global currencies amid economic concerns stemming from the ongoing Middle East conflict and the continued disruptions to energy supplies.

In fact, shipping traffic through the critical Strait of Hormuz remains drastically reduced due to Iran’s restrictions and the US naval blockade of Iranian ports. Furthermore, the US and Iran remain at odds over key issues, including Tehran’s nuclear program and the strategic waterway. This keeps geopolitical risk premium in play and continues to undermine the JPY, despite hawkish Bank of Japan (BoJ) expectations.

BoJ Deputy Governor Himino Ryozo said on Tuesday that the central bank will continue to raise the policy rate based on economic activity, prices, and financial conditions. Even speculations that Japanese authorities will step in again to prop up the domestic currency do little to impress the JPY bulls, suggesting that the path of least resistance for the GBP/JPY cross is to the upside and backing the case for further gains.

Meanwhile, traders pushed back expectations for the likely timing of the next interest rate hike by the Bank of England (BoE) to December after the UK Consumer Price Inflation (CPI) unexpectedly slowed to the 2.8% YoY rate in April. Adding to this, the UK political chaos and growing calls for Prime Minister Keir Starmer to step down might hold back the GBP bulls from placing aggressive bets and cap the GBP/JPY cross.

Japanese Yen Price This Month

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this month. Japanese Yen was the strongest against the Canadian Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.75%1.15%1.77%1.78%0.73%0.60%0.48%
EUR-0.75%0.38%0.96%0.98%0.00%-0.12%-0.30%
GBP-1.15%-0.38%0.58%0.64%-0.40%-0.52%-0.69%
JPY-1.77%-0.96%-0.58%0.00%-1.03%-1.26%-1.33%
CAD-1.78%-0.98%-0.64%-0.00%-1.04%-1.27%-1.30%
AUD-0.73%0.00%0.40%1.03%1.04%-0.13%-0.30%
NZD-0.60%0.12%0.52%1.26%1.27%0.13%-0.17%
CHF-0.48%0.30%0.69%1.33%1.30%0.30%0.17%

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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

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EUR/GBP Price Forecasts: Euro remains on the defensive with 0.8640 capping gains

  • EUR/GBP bounces up from lows sub 0.8620, but remains capped below 0.8640.
  • Hawkish comments by ECB’s Lane have failed to support the Euro.
  • In the UK, fading expectations of BoE hikes are weighing on GBP rallies.

The Euro (EUR) is trading higher against the British Pound (GBP) on Tuesday, trimming losses after depreciating more than 1% in a bit more than a week. Euro bulls, however, remain capped below the 0.8640 area so far, which leaves the pair trading within Monday’s range, and keeps its broader bearish trend intact.

Hawkish comments by European Central Bank (ECB) Chief Economist Philippe Lane, who endorsed market expectations of upcoming rate hikes earlier on Tuesday, have failed to provide any significant support to the Euro. 

The Pound, on the other hand, remains fairly resilient to the UK’s uncertain political scenario, although the low yield on UK Gilts amid fading hopes of Bank of England (BoE) monetary tightening, as well as a somewhat more cautious market, are keeping Cable’s upside attempts limited.

Technical Analysis: Euro bears remain in control

EUR/GBP Chart Analysis

EUR/GBP trades at 0.8634, with the near-term bearish structure still in place and momentum indicators pointing to moderate bearish pressure. The Relative Strength Index (RSI) has bounced up from oversold levels, but remains within negative territory. The Moving Average Convergence Divergence (MACD) has inched back into positive territory, yet hints at a consolidative, neutral bias, rather than at a trend shift.

Initial resistance lies at a previous support in the 0.8640 area (May 21 low). Further up, the May 20 and May 19 highs, near 0.8665, and the 0.8685 area, respectively, emerge as the next bullish targets.

On the downside, a break below 2026 lows between 0.8605 and 0.8615 would bring the August 2025 low, at the 0.8600 area, and the 127.2% Fibonacci extension of the May selloff, at 0.8587, into focus.

(The technical analysis of this story was written with the help of an AI tool.)

Euro Price Today

The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the New Zealand Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.05%0.19%0.18%0.03%0.12%0.47%0.28%
EUR-0.05%0.16%0.13%-0.00%0.10%0.44%0.22%
GBP-0.19%-0.16%-0.02%-0.16%-0.06%0.28%0.08%
JPY-0.18%-0.13%0.02%-0.14%-0.03%0.29%0.12%
CAD-0.03%0.00%0.16%0.14%0.12%0.46%0.25%
AUD-0.12%-0.10%0.06%0.03%-0.12%0.35%0.14%
NZD-0.47%-0.44%-0.28%-0.29%-0.46%-0.35%-0.21%
CHF-0.28%-0.22%-0.08%-0.12%-0.25%-0.14%0.21%

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 Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).