it is consolidating at 1.3232 on Tuesday. The pound remains near its lowest levels globally since late November, with increasing pressure stemming from uncertainty over the conflict with Iran and rising oil prices.
At the same time, the US dollar continues to receive support from strong US labor market data, which has reduced expectations for easing from the Federal Reserve.
US President Donald Trump has warned Iran of serious consequences if it refuses to reopen the Strait of Hormuz. However, according to US intelligence estimates, the likelihood of Tehran meeting these demands remains low.
Meanwhile, the possibility of a 45-day truce involving the United States, Iran and regional mediators is being discussed, which could partially reduce tensions.
Amid high oil prices, investors have effectively ruled out a Fed rate cut this year. In the UK, by contrast, the market is pricing in two Bank of England rate hikes by 2026. However, Bank of England Governor Andrew Bailey has warned that such expectations may be excessive.
Technical analysis
On the GBP/USD chart for the last quarter hour, the market is forming a wide consolidation range around the 1.3262 level, which currently extends to 1.3180. A move towards 1.3262 is expected in the short term. 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 1.3411, 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 below zero and pointing downwards.
On the H1 chart, the market has formed a compact consolidation range around the 1.3222 level. A break lower has initiated a wave structure that extends to 1.3120. If this level is broken, further downside potential would emerge towards 1.3050. Conversely, an upside breakout of the range could trigger a rebound to 1.3286. Technically, this scenario is confirmed by the stochastic oscillator, with its signal line below 50 and pointing towards 20.
Conclusion
GBP/USD remains stuck near six-month lows as a perfect storm of geopolitical uncertainty, rising oil prices and diverging central bank expectations weigh heavily on sterling. While strong US jobs data has boosted the dollar by further pushing away expectations of Fed rate cuts, the UK market's assessment of two BoE rate hikes by 2026 looks increasingly optimistic, especially given Governor Bailey's own caution. The possibility of a 45-day truce offers a glimmer of hope for a reduction in tension, but US intelligence suggests Iranian compliance remains unlikely. Technical indicators point firmly to the downside and unless geopolitical tensions subside substantially, the pound faces continued headwinds.
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.
