rose to 1.3450 on Wednesday. Expectations of reduced tension in the Middle East supported the pound as lower oil prices reduced inflationary risks for the British economy, which relies heavily on energy imports.
Despite this localized strengthening, investors continue to closely follow the development of the conflict between the United States, Israel and Iran. Its consequences could significantly affect the global economy. The situation remains uncertain: US President Donald Trump has suggested the war could end soon, but Iran's Islamic Revolutionary Guard Corps said oil shipments through the Strait of Hormuz will not resume as long as US and Israeli attacks continue.
Amid these external risks, investors are also reviewing expectations about UK monetary policy. On average, a Bank of England interest rate cut in the second quarter is now considered possible.
Domestic factors continue to weigh on the pound. Weak economic statistics and political uncertainty in the UK maintain downside risks for the currency.
An additional source of tension may be the local elections, scheduled for two months.
Technical analysis
On the GBP/USD chart for the last quarter hour, the market is forming a wide consolidation range around the 1.3382 level, which currently extends to 1.3474. A drop to 1.3384 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 1.3515, while a bearish break would suggest further movement towards 1.3133. Technically, this scenario is confirmed by the MACD indicator, the signal line of which is located above the zero level and points strictly upward.
On the H1 chart, the market has formed a compact consolidation range around the 1.3434 level. A break lower would initiate a wave structure that would extend to 1.3382. Breaking this level would open further downside potential towards 1.3125. On the contrary, a bullish breakout of the range could trigger a wave of growth to the 1.3515 level. Technically, this scenario is supported by the stochastic oscillator, with its signal line above the 50 level and pointing strictly upwards.
Conclusion
GBP/USD has found temporary relief amid hopes of easing tension in the Middle East, which has helped moderate oil prices and ease inflation concerns in the UK. However, the underlying outlook remains uncertain, with geopolitical risks, domestic economic weakness and political tensions continuing to cloud the outlook. While technical indicators suggest potential for further growth in the near term, the broader trend will likely depend on whether geopolitical conditions stabilize and whether the Bank of England signals a clearer policy direction.
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.
