On Tuesday, GBP/USD increased to 1.3506. Sterling has decisively distanced itself from last week’s one-month high of 1.3480. The recent collapse of US-Iran talks over the weekend has intensified pressure on the currency. The impasse in discussions arose after Tehran declined to relinquish its nuclear program, coupled with disputes regarding the agreement’s terms, which the Iranian representatives characterized as overly demanding. In this context, Donald Trump issued a warning regarding the potential blockage of the Strait of Hormuz, an essential route for oil supplies. This resulted in Brent crude prices reaching 102.00 USD per barrel.
The price of oil has significantly increased, exacerbating the already tense global energy landscape and heightening the potential for an inflationary shock. Consequently, there has been a shift in market expectations towards a more stringent policy from the Bank of England. Consequently, market participants are currently factoring in a minimum of one interest rate increase by the conclusion of 2026. The H4 GBP/USD chart indicates that the market is establishing a broad consolidation range centered around the 1.3333 level, currently reaching up to 1.3535. A decrease to 1.3333 is anticipated in the short term. Upon the conclusion of this correction, it is probable that a new consolidation range will emerge. An upside breakout could lead to a continuation wave towards 1.3411, whereas a downside breakout may indicate further movement to 1.3120.
This scenario is technically validated by the MACD indicator, with its signal line positioned above the zero level and demonstrating a clear downward trajectory. On the H1 chart, the market established a tight consolidation range near the 1.3455 level and, following an upward breakout, finalized a wave structure reaching 1.3535. A decline towards the 1.3388 level is now anticipated. This scenario is validated by the Stochastic oscillator, which shows its signal line positioned above the 80 level and decisively trending down towards 20. GBP/USD has identified a support level as market participants seem to have predominantly accounted for the recent geopolitical tensions stemming from unsuccessful US-Iran negotiations.
Trump’s threat to block the Strait of Hormuz has pushed oil prices above 102.00 USD per barrel, heightening inflationary concerns and altering expectations towards a more stringent Bank of England policy, with at least one rate hike now anticipated for 2026. Despite the resilience displayed by sterling, the overall outlook is still overshadowed by risks associated with the energy market. Technical indicators indicate a potential near-term pullback; however, the pair’s trajectory will ultimately hinge on the progression of geopolitical tensions—whether they intensify or begin to subside.