The pair continued to fall against the US dollar on Friday and will close June with its worst monthly performance since July last year, trading near 1.3182. Since the beginning of the month, the pound has lost around 2.2%. Current levels are the lowest since November last year.
Several factors are weighing on the British currency. First, lower oil prices following the easing of tensions between the United States and Iran have reduced inflation risks and reduced the likelihood of more aggressive rate hikes by the Bank of England. The market now expects only one rate increase before the end of the year, compared to two that were discounted just a few weeks ago.
The UK's domestic politics have become an additional source of uncertainty. Following the resignation of Prime Minister Keir Starmer, investors are awaiting the appointment of a new head of government and, most importantly, a new finance minister. Andy Burnham is seen as the most likely successor, although the make-up of the government's future economic team remains unclear.
The market is closely monitoring decisions on the staffing of the new cabinet. These appointments will shape the country's future fiscal policy and influence investor sentiment towards British assets.
Technical analysis
On the H4 chart of GBP/USD, the market completed a downward wave to 1.3140 and a growth wave towards 1.3217. In practice, a wide consolidation range is forming around 1.3200.
If the pair breaks this range to the upside, it will open the potential for the wave to continue towards 1.3240. If the pair breaks lower, it will open the possibility of continuing the decline towards 1.3033.
Technically, this scenario is confirmed by the MACD indicator. Its signal line is below the zero mark and points firmly downwards.
On the H1 chart, GBP/USD formed a compact consolidation range around 1.3180. At the moment, the range has widened down to 1.3140. Further growth towards 1.3220 is expected, followed by a decline to 1.3060.
The stochastic oscillator also supports this scenario. Its signal line is below 50 and pointing firmly towards 20.
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.
