is attempting to recover on Tuesday from earlier declines, bouncing from 1.3198 after five consecutive sessions of selling. The pound remains under pressure as investors assess the impact of the conflict with Iran on the British economy.
Despite this, since the beginning of March, the pound remains one of the most stable currencies against the dollar.
However, the pound remains vulnerable. Britain's high dependence on gas imports, persistently high inflation and pressure on public finances are increasing the risks. The yield remains around 4.98%, close to highs not seen since 2008, following recent increases.
Particular attention is being paid to the debt market: following the sale of government bonds, some pension funds were forced to increase collateral to cover their positions, although the scale is still far from the crisis levels of 2022.
Macroeconomic data also points to a slowdown in the economy. Business activity is growing at its slowest pace in six months, production costs are accelerating and retail sales are declining.
The Bank of England is likely to remain cautious about changing rates – this remains the prevailing expectation.
Technical analysis
On the GBP/USD H4 chart, the market is forming a wide consolidation range around 1.3297, which currently extends to 1.3434. A drop to 1.3156 is likely in the short term, followed by the formation of a new consolidation range. 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, whose signal line is below zero and pointing downwards.
On the H1 chart, the market has formed a compact consolidation range around 1.3322. 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, an upside breakout of the range could trigger a bounce towards 1.3300. Technically, this scenario is confirmed by the stochastic oscillator, with its signal line below 50 and pointing downwards.
Conclusion
GBP/USD is attempting to stabilize after five consecutive days of selling, although the overall outlook remains fragile. While sterling has shown relative resilience compared to other currencies since March, growing headwinds – including the UK's dependence on energy imports, persistent inflation, debt market pressures and slowing economic activity – continue to weigh on the pound. The Bank of England's cautious stance offers little immediate support and technical indicators point to further downside potential. A pause in the recovery may materialize, but a sustained rise appears unlikely without a tangible change in geopolitical tensions or domestic economic data.
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.
