it stabilized around 1.3227 on Friday after a sharp drop the previous day. The growing geopolitical tensions have weighed after new statements by US President Donald Trump. Increasing military rhetoric towards Iran and lack of clarity over the reopening of the Strait of Hormuz has led to an increase and greater demand for the Strait of Hormuz as a safe haven asset.
Additional pressure on the pound comes from the UK's heavy dependence on energy imports and concerns about public finances. Yields have risen along with energy prices, adding more pressure to the currency.
In general, market dynamics develop according to a classic risk aversion scenario. Rising oil prices and increased geopolitical risks are weighing on most assets, while the US dollar remains the key safe haven currency.
The pound had already fallen by approximately 1.9% compared to March on fears of an energy shock.
Technical analysis
On the GBP/USD H4 chart, the market is forming a wide consolidation range around the 1.3250 level, which currently extends to 1.3180. A short-term move towards 1.3250 is expected. Once this correction is completed, a new consolidation range is likely to form. A bullish break would open the way for a continuation move to 1.3300, while a bearish break would suggest a further move to 1.3100. Technically, this scenario is confirmed by the MACD indicator, with its signal line below zero and pointing firmly downwards.
On the H1 chart, the market has formed a compact consolidation range around 1.3254. A break lower has initiated a wave structure that extends to 1.3100. If this level is broken, further downside potential would emerge towards 1.3050. Conversely, a bullish breakout of the range could trigger a rebound to 1.3300. Technically, this scenario is confirmed by the stochastic oscillator, with its signal line below 50 and pointing downwards.
Conclusion
GBP/USD remains under sustained pressure as President Trump's escalating military rhetoric towards Iran and the unresolved status of the Strait of Hormuz push up oil prices, boosting safe-haven demand for the US dollar. The UK's dependence on energy imports and fragile public finances leave it particularly vulnerable in this risk-averse environment. Having lost almost 2% in March, the pound faces continued headwinds, with technical indicators pointing to further downside potential. Short-term stabilization is possible, but any sustained recovery would likely require a tangible reduction in geopolitical tensions or a shift in broader risk sentiment.
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.
