rose to 1.3403 on Wednesday, with British politics taking center stage for investors.
The market is evaluating the next change of prime minister: Andy Burnham will take office on July 20. Of additional interest is the potential candidate for the new Minister of Finance. In betting markets, the favorite is Ed Miliband, who investors see as a supporter of more active fiscal spending.
At the same time, market participants are watching rising tensions in the Middle East, rising oil prices and rising inflation risks. The United States has continued its attacks on Iran after Donald Trump reimposed a naval blockade against Iranian shipping and his proposal for a 20% tariff to cover the costs of securing the Strait of Hormuz.
In this context, markets have reinforced expectations of new rate hikes by the Bank of England. Investors are already almost fully pricing in two rate hikes in 2026, and a September hike is already largely reflected in quotes.
In the United States, weaker-than-expected June inflation data has eased pressure on the Federal Reserve. However, Christopher Waller warned that the regulator could tighten policy again if inflation remains above the 2% target.
Technical analysis
On the GBP/USD chart of the last quarter hour, the market is forming a wave of growth towards 1.3451. There is practically a wide consolidation range forming around the 1.3393 level. A bullish breakout from this range would open the possibility of the wave continuing to 1.3453. A break to the downside would suggest the possibility of the wave continuing to 1.3333, with the prospect of the trend extending to 1.3090. Technically, this scenario is confirmed by the MACD indicator, whose signal line is located above the zero level and points strictly downwards.
On the H1 chart, the market has formed a compact consolidation range around the 1.3400 level, which currently extends to 1.3370. A rise to 1.3451 is expected, followed by a fall to 1.3330. Technically, this scenario is confirmed by the stochastic oscillator, with its signal line below the 80 level and pointing strictly downwards to the 20 level.
Conclusion
GBP/USD has risen as markets focus on the UK's upcoming political transition, with Andy Burnham becoming Prime Minister on July 20. The possible appointment of Ed Miliband as Chancellor, seen as a supporter of more active fiscal spending, adds an element of intrigue. Meanwhile, geopolitical tensions in the Middle East, including renewed US attacks on Iran and a proposed 20% tariff to secure the Strait of Hormuz, have pushed up oil prices and reinforced expectations of tightening from the Bank of England.
Markets are now pricing in two rate hikes for 2026, with September already priced in. In the United States, weaker inflation data has eased pressure on the Federal Reserve, although officials remain vigilant. Technically, the pound could see a further rise towards 1.3451 before a possible pullback, with the broader direction depending on political developments and UK geopolitical risks.
By RoboForex Analysis Department
Disclaimer: Any forecast contained herein is based on the author's personal opinion. This analysis cannot be considered trading advice. RoboForex assumes no responsibility for trading results based on the trading recommendations and reviews contained herein.
