A stronger dollar pressured the pound against the dollar, leading to a correction and suggesting short-term range-bound trading.
2026-05-11 13:15:57
During Monday's Asian trading session, the British pound (GBP/USD) rebounded technically after a gap-down opening at the start of the week, rising back to around the 1.3600 level . While safe-haven buying of the US dollar persisted, hawkish expectations from the Bank of England and easing political risks in the UK helped stabilize the pound in the short term.
The United States and Iran continue to reject each other's ceasefire proposals, with significant differences remaining regarding their nuclear programs and shipping in the Strait of Hormuz. The renewed escalation of hostility in the Middle East has significantly heightened market concerns about global energy supply security. Some market institutions point out that the continued deterioration of the Middle East situation is driving global funds back towards safe-haven assets such as the US dollar. As the world's primary reserve currency, the US dollar typically attracts capital inflows during periods of heightened international geopolitical risk, which also exerts temporary downward pressure on the pound against the dollar. Furthermore, the renewed rise in international oil prices has further reinforced market concerns about renewed global inflationary pressures. Rising oil prices may delay the pace of interest rate cuts by major central banks worldwide, thus continuing to support the dollar's interest rate advantage.
Meanwhile, the US non-farm payroll data for April, released last week, significantly exceeded market expectations. The data showed that the US added 115,000 non-farm jobs in April, significantly higher than the market expectation of 62,000; the unemployment rate remained at 4.3% . Following the data release, US Treasury yields rose again, and market bets on a rapid interest rate cut by the Federal Reserve significantly decreased.
Market analysts believe that while the US job market is experiencing a marginal slowdown, the overall economic resilience remains strong, and the Federal Reserve is likely to maintain a hawkish stance in the short term. The rise in US Treasury yields further enhances the attractiveness of the US dollar and limits the upside potential of the pound against the dollar. However, the pound also faces some supportive factors recently.
Previous market concerns about Prime Minister Starmer's political standing have eased somewhat. Despite the Labour Party's poor performance in some local elections and the Scottish and Welsh parliamentary votes, market sentiment has gradually stabilized. Furthermore, the Bank of England has recently continued to send hawkish signals. The Bank of England stated that further interest rate hikes are possible if inflation remains high. The Bank of England's hawkish stance provides significant medium- to long-term support for the pound. Some institutions believe that current core inflation in the UK remains above the Bank of England's target range, making a rapid shift to easing monetary policy unlikely in the short term.
In the short term, if the situation in the Middle East escalates further, the US dollar may continue to remain strong; however, if the Bank of England continues to send hawkish signals, the downside potential of the pound may be limited.
From the daily chart of GBP/USD, the exchange rate is currently maintaining a high-level consolidation structure. The price previously encountered resistance around 1.3650 , indicating strong technical pressure above. On the daily chart, the exchange rate remains within the main upward channel, with the 20-day moving average continuing its upward trend, suggesting the medium-term trend has not been significantly broken. However, the MACD indicator's red bars are beginning to shorten at high levels, indicating weakening upward momentum; the RSI indicator has also retreated from overbought territory, reflecting a cooling of short-term buying sentiment. The 1.3550 area currently constitutes a key support level on the daily chart; a break below this level could lead to a further pullback to around 1.3480. On the upside, the 1.3650-1.3700 area remains the main resistance zone. If the safe-haven demand for the US dollar weakens, GBP/USD may have a chance to retest its recent highs.
Editor's Summary : The current GBP/USD market is in a tug-of-war between the "dollar's safe-haven appeal" and "hawkish expectations from the Bank of England." Continued tensions in the Middle East are driving safe-haven inflows into the dollar, while strong US employment data continues to support the dollar's interest rate advantage. However, the Bank of England's hawkish stance and easing political risks in the UK are providing some support for the pound. From a technical perspective, although GBP/USD has entered a short-term consolidation phase, the overall medium-term upward trend has not been completely broken. The market needs to focus on three key areas: first, whether the Middle East situation will escalate further; second, changes in the Federal Reserve's interest rate expectations; and third, UK inflation and the Bank of England's policy signals. Overall, GBP/USD may maintain a high-level range-bound movement in the short term, and its future direction will still depend on changes in dollar safe-haven sentiment.
The United States and Iran continue to reject each other's ceasefire proposals, with significant differences remaining regarding their nuclear programs and shipping in the Strait of Hormuz. The renewed escalation of hostility in the Middle East has significantly heightened market concerns about global energy supply security. Some market institutions point out that the continued deterioration of the Middle East situation is driving global funds back towards safe-haven assets such as the US dollar. As the world's primary reserve currency, the US dollar typically attracts capital inflows during periods of heightened international geopolitical risk, which also exerts temporary downward pressure on the pound against the dollar. Furthermore, the renewed rise in international oil prices has further reinforced market concerns about renewed global inflationary pressures. Rising oil prices may delay the pace of interest rate cuts by major central banks worldwide, thus continuing to support the dollar's interest rate advantage.
Meanwhile, the US non-farm payroll data for April, released last week, significantly exceeded market expectations. The data showed that the US added 115,000 non-farm jobs in April, significantly higher than the market expectation of 62,000; the unemployment rate remained at 4.3% . Following the data release, US Treasury yields rose again, and market bets on a rapid interest rate cut by the Federal Reserve significantly decreased.
Market analysts believe that while the US job market is experiencing a marginal slowdown, the overall economic resilience remains strong, and the Federal Reserve is likely to maintain a hawkish stance in the short term. The rise in US Treasury yields further enhances the attractiveness of the US dollar and limits the upside potential of the pound against the dollar. However, the pound also faces some supportive factors recently.
Previous market concerns about Prime Minister Starmer's political standing have eased somewhat. Despite the Labour Party's poor performance in some local elections and the Scottish and Welsh parliamentary votes, market sentiment has gradually stabilized. Furthermore, the Bank of England has recently continued to send hawkish signals. The Bank of England stated that further interest rate hikes are possible if inflation remains high. The Bank of England's hawkish stance provides significant medium- to long-term support for the pound. Some institutions believe that current core inflation in the UK remains above the Bank of England's target range, making a rapid shift to easing monetary policy unlikely in the short term.
In the short term, if the situation in the Middle East escalates further, the US dollar may continue to remain strong; however, if the Bank of England continues to send hawkish signals, the downside potential of the pound may be limited.
From the daily chart of GBP/USD, the exchange rate is currently maintaining a high-level consolidation structure. The price previously encountered resistance around 1.3650 , indicating strong technical pressure above. On the daily chart, the exchange rate remains within the main upward channel, with the 20-day moving average continuing its upward trend, suggesting the medium-term trend has not been significantly broken. However, the MACD indicator's red bars are beginning to shorten at high levels, indicating weakening upward momentum; the RSI indicator has also retreated from overbought territory, reflecting a cooling of short-term buying sentiment. The 1.3550 area currently constitutes a key support level on the daily chart; a break below this level could lead to a further pullback to around 1.3480. On the upside, the 1.3650-1.3700 area remains the main resistance zone. If the safe-haven demand for the US dollar weakens, GBP/USD may have a chance to retest its recent highs.
Editor's Summary : The current GBP/USD market is in a tug-of-war between the "dollar's safe-haven appeal" and "hawkish expectations from the Bank of England." Continued tensions in the Middle East are driving safe-haven inflows into the dollar, while strong US employment data continues to support the dollar's interest rate advantage. However, the Bank of England's hawkish stance and easing political risks in the UK are providing some support for the pound. From a technical perspective, although GBP/USD has entered a short-term consolidation phase, the overall medium-term upward trend has not been completely broken. The market needs to focus on three key areas: first, whether the Middle East situation will escalate further; second, changes in the Federal Reserve's interest rate expectations; and third, UK inflation and the Bank of England's policy signals. Overall, GBP/USD may maintain a high-level range-bound movement in the short term, and its future direction will still depend on changes in dollar safe-haven sentiment.
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