contracted to 1.3350 on Thursday, as the pound remained under pressure and traded near three-month lows.
Pressure on the dollar has eased in the past 24 hours following reports that Iran has offered to discuss terms for a possible end to the conflict.
According to The New York Times, representatives of the Iranian Intelligence Ministry contacted the CIA through intermediaries, just one day after the start of joint attacks between the United States and Israel. However, Israeli authorities have advised Washington not to respond to this proposal yet.
Investors are also weighing the impact of rising energy prices on the Bank of England's (BoE) future policy. With inflation risks rising, expectations of an imminent rate cut have diminished significantly.
The market now assigns only a 20% chance that the Bank of England will cut rates this month, a sharp drop from around 75% just a week ago.
Meanwhile, the UK's Office for Budget Responsibility (OBR) has lowered its economic growth forecast for 2026 to 1.1%, down from 1.4% previously forecast. However, the outlook for 2027 and 2028 remains more optimistic, with annual growth expected at around 1.6%. A gradual decrease in public debt and inflation is also expected.
Technical analysis
On the GBP/USD chart for the last quarter hour, the market is forming a wide consolidation range around the 1.3326 level, which currently extends to 1.3393. A drop to 1.3131 is expected in the short term. After this correction, it is likely that a new consolidation phase will begin. A bullish break would pave the way for the wave to extend to 1.3410, while a bearish break would suggest further movement towards 1.2971. This scenario is confirmed by the MACD indicator, which shows its signal line below the zero line and points firmly downwards.
On the H1 chart, the market has formed a compact consolidation range around the 1.3333 level. A break lower has initiated a wave structure that extends to 1.3266. If this level is broken, there may be further downside potential towards 1.3125. This scenario is supported by the stochastic oscillator, whose signal line is below the 50 level and points firmly downwards.
Conclusion
GBP/USD remains under pressure as changing central bank expectations and geopolitical developments drive price action. The dramatic reversal in the Bank of England's rate cut odds (from 75% to just 20% in a week) reflects growing concerns about inflation driven by rising energy prices. While tentative diplomatic signals from Iran have temporarily eased the dollar's strength, the technical outlook for the pair remains decidedly bearish, with further declines anticipated in the near term.
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.
