Wall Street closes at a record for the first time since end of January
GBP/USD rose to 1.3450 on Wednesday. Expectations of de-escalation in the Middle East supported the pound, as lower oil prices reduced inflationary risks for the British economy, which is heavily dependent on energy imports.
Despite this localised strengthening, investors continue to monitor the development of the conflict between the United States, Israel and Iran closely. 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 stated that oil shipments through the Strait of Hormuz will not resume while attacks by the United States and Israel continue.
Amid these external risks, investors are also revising expectations for 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 to take place in two months.
Technical Analysis
On the H4 GBP/USD chart, the market is forming a wide consolidation range around the 1.3382 level, currently extending up to 1.3474. A decline to 1.3384 is expected in the near term. Following the completion of this correction, the formation of a new consolidation range is likely. An upside breakout would open potential for a continuation wave to 1.3515, while a downside breakout would suggest further movement towards 1.3133. Technically, this scenario is confirmed by the MACD indicator, whose signal line is above the zero level and pointing strictly upwards.
On the H1 chart, the market has formed a compact consolidation range around the 1.3434 level. A downside breakout would initiate a wave structure extending to 1.3382. Should this level be breached, further downside potential towards 1.3125 would open. Conversely, an upside breakout from the range could trigger a growth wave 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 for Middle East de-escalation, which has helped moderate oil prices and ease inflationary concerns for the UK. However, the underlying picture remains uncertain, with geopolitical risks, domestic economic weakness, and political tensions continuing to cloud the outlook. While technical indicators suggest potential for further upside in the near term, the broader trend will likely depend on whether geopolitical conditions stabilise and whether the Bank of England signals a clearer policy direction.
By RoboForex Analytical Department
Disclaimer:
Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.