rose to 1.3506 on Tuesday. Sterling has comfortably moved away from last week's one-month high of 1.3480. Pressure on the currency had previously increased following the collapse of talks between the United States and Iran over the weekend.
The breakdown of dialogue occurred after Tehran's refusal to abandon its nuclear program and disagreements over the terms of the agreement, which the Iranian side described as excessive. In this context, Donald Trump threatened to block the Strait of Hormuz, a critical oil supply route. This brought prices to $102.00 per barrel.
Oil has become significantly more expensive, adding tension to the already tense global energy situation and increasing the risks of an inflationary shock. As a result, market expectations have shifted towards tighter policy from the Bank of England.
As a result, investors are now pricing in at least an interest rate hike by the end of 2026.
Technical analysis
On the GBP/USD chart for the last quarter hour, the market is forming a wide consolidation range around the 1.3333 level, which currently extends to 1.3535. A drop to 1.3333 is expected in the short term. Once this correction is completed, a new consolidation range is likely to form. A bullish break would open potential for a continuation wave to 1.3411, while a bearish break would suggest a further move to 1.3120. Technically, this scenario is confirmed by the MACD indicator, whose signal line is above the zero level and points firmly downwards.
According to the H1 chart, the market formed a compact consolidation range around the 1.3455 level and, with a bullish breakout, completed a wave structure up to 1.3535. Now the start of a fall towards the level of 1.3388 is expected. Technically, this scenario is confirmed by the stochastic oscillator, with its signal line above the 80 level and pointing firmly towards 20.
Conclusion
GBP/USD has found support as markets appear to have largely priced in the latest geopolitical escalation following the collapse of US-Iran talks. Trump's threat to block the Strait of Hormuz has pushed oil prices above $102.00 a barrel, intensifying inflation concerns and shifting expectations towards tighter policy from the Bank of England, with at least one rate hike expected in 2026. While sterling has shown resilience, the broader outlook remains clouded by risks related to the energy market. Technical indicators suggest that a short-term pullback is likely, but the direction of the pair will ultimately depend on whether geopolitical tensions continue to rise or show signs of easing.
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.
