GBP/USD Market Update

The GBP/USD pair is facing challenges in maintaining momentum from the previous day, when it pushed past the notable threshold of 1.3500—its highest point in about a week and a half. As of now, the pair is hovering around 1.3485, reflecting a slight decrease of just over 0.10% for the day as the US dollar shows a minor uptick.

Recent reports indicate that the US military conducted a self-defense strike in southern Iran on Monday, which seems to be dampening prospects for a resolution to the ongoing Middle Eastern conflict that has persisted for three months. Simultaneously, rising inflation fears are rekindling expectations for a more hawkish approach from the US Federal Reserve, which has aided the safe-haven US dollar in regaining some ground after its drop to a one-week low in the previous session. This situation has put additional pressure on the GBP/USD pair.

Looking at the technical side, the current spot price maintains a slightly bullish sentiment, staying above the 200-period exponential moving average (EMA) on the 4-hour chart and the 50.0% Fibonacci retracement from the recent monthly high. This positive outlook is bolstered by a somewhat favorable Relative Strength Index (RSI) around 61, alongside a Moving Average Convergence Divergence (MACD) that remains in the positive zone.

Indicators suggest that while there aren’t strong overbought signals, upward momentum is still present. The immediate resistance can be seen at the 61.8% Fibonacci level. Should prices move higher, the next retracement at 1.3517 is followed by the 78.6% level at 1.3575. However, a recent swing high at 1.3649 serves as a more distant resistance barrier.

On the downside, initial support might be found at the 50.0% retracement level of 1.3476. This level is further reinforced by the 200-period EMA at 1.3460, and additional support comes from the 38.2% level at 1.3435. If the GBP/USD continues on a downward trajectory, it could find support around 1.3384 and 1.3303.