The GBP/USD pair climbed to about 1.3235 during Asian trading but couldn’t quite break through the weekly bearish gap, despite a slight dip in the U.S. dollar. Yet, any potential for further gains seems somewhat constrained.
Mediators from Qatar and Pakistan have rolled out a formal 60-day roadmap aimed at reaching a conclusive peace deal between the U.S. and Iran. This initiative might limit safe haven investments and prompt some short covering in the GBP/USD pair. Still, recent geopolitical events, coupled with the U.S. Federal Reserve’s aggressive stance, could bolster the dollar.
In a related development, Iran re-closed the Strait of Hormuz on Saturday in response to escalating tensions with Israel in Lebanon. Moreover, Iranian negotiators have pulled out of negotiations in Switzerland following U.S. President Donald Trump’s threats to initiate military action against Iran. This situation may sustain the geopolitical risk premium, favoring dollar bulls and hinting at another sell-off in the GBP/USD region.
On a different note, reports suggest that British Prime Minister Keir Starmer may announce his resignation as soon as Monday, possibly making way for former Manchester mayor Andy Burnham to step in. Political instability in the UK might further weaken the British pound and could hinder the GBP/USD pair’s performance, so it may be wise to tread carefully before making any bold bullish moves.
Additionally, the Bank of England’s cautious approach toward rate hikes suggests that subsequent increases might trigger selling opportunities. Strong upward momentum would be needed for the GBP/USD to confirm a short-term bottom and achieve a significant recovery from its recent lows, which hit since late March.
