A decline in risk aversion pressured the dollar, and the pound sterling returned above 1.3400 against the dollar.
2026-06-04 14:14:18
The British pound (GBP/USD) saw a technical rebound in Asian trading on Thursday, regaining buying support after nearing its weekly lows in the previous session and rising above the 1.3400 level. However, overall market sentiment remained cautious, and the pound's rebound was relatively limited by the combined effects of global geopolitical risks and monetary policy expectations.
The core focus of the foreign exchange market recently remains on developments in the Middle East and policy expectations of major central banks. Following the ceasefire agreement reached between Lebanon and Israel after negotiations in Washington, market concerns about a further escalation of the regional conflict have eased. Improved risk appetite has prompted some safe-haven funds to flow out of the dollar market, ending the dollar index's previous upward trend and providing short-term support for the pound against the dollar.
However, the market remains highly vigilant about the future situation in the Middle East. Although there are signs of easing tensions along the Lebanese-Israeli border, the tensions between the United States and Iran have not improved significantly.
Meanwhile, negotiations between the United States and Iran regarding the nuclear issue and the safety of shipping in the Strait of Hormuz have yet to yield any substantial breakthroughs. Market concerns persist that any new military conflict could impact global energy supplies and further drive up international oil prices. The Strait of Hormuz handles approximately 20% of global seaborne crude oil transport; disruptions to this transport would create new supply pressures on the international energy market. Rising energy prices would not only push up global inflation but could also force major central banks to maintain tight monetary policies for an extended period.
The market is currently readjusting its assessment of the Federal Reserve's future interest rate path. Due to the continued resilience of US economic data, coupled with increased inflation risks from rising energy prices, investor expectations for further tightening by the Fed have clearly intensified. Market estimates indicate that traders are increasingly betting on future Fed rate hikes, pushing US Treasury yields high and providing solid support for the US dollar. Although the dollar has recently corrected due to a decline in safe-haven demand, its interest rate advantage still allows it to maintain a relatively strong position.
In contrast, the UK's economic growth outlook still faces certain challenges. High interest rates are putting pressure on consumption and the housing market, while business investment remains relatively weak. Although the Bank of England remains cautious in controlling inflation, the market generally believes its policy space is more limited than that of the Federal Reserve. The market is now turning its attention to the upcoming US non-farm payroll report. As a key indicator of the US economic situation, the non-farm payroll data will directly influence market judgments on the future policy direction of the Federal Reserve.
If job growth continues to be strong, it could further reinforce market expectations of a prolonged high-interest-rate environment, thus driving the dollar higher again. Conversely, if the job market shows clear signs of slowing, it could weaken the dollar's advantage and give the pound a further chance to rebound. From an overall market sentiment perspective, the pound/dollar exchange rate is currently in a situation of both short-term rebound and medium- to long-term pressure. On the one hand, weakening safe-haven buying of the dollar is supporting the pound; on the other hand, expectations of a Fed rate hike and Middle East risks remain favorable for the dollar's performance. Therefore, the market may continue to fluctuate before the release of key economic data.
From a daily chart perspective, the GBP/USD pair remains in a consolidation phase at high levels. While the price is holding above major moving averages, recent upward momentum has weakened. The MACD indicator is above the zero line, but the red histogram bars are shortening, indicating a slowdown in the upward trend. The RSI indicator has fallen back to around 60, suggesting that market sentiment is gradually returning to rationality from extreme optimism. Currently, key support levels to watch are 1.3350 and 1.3280, while resistance levels are 1.3480 and 1.3550.
From a 4-hour chart perspective, the exchange rate has been consolidating around the 1.3400 level recently. The MACD indicator is repeatedly hovering around the zero line, indicating that the short-term market direction is still unclear. The RSI remains fluctuating around 50, showing a relatively balanced power between bulls and bears. If the price breaks through the 1.3480 resistance, it may further challenge the 1.3550 area; if it falls below the 1.3350 support, it may fall back to around 1.3280 or even 1.3200.
Editor's Summary : The current movement of the pound against the dollar is mainly influenced by both changes in risk aversion and expectations regarding Federal Reserve policy. The ceasefire agreement between Lebanon and Israel eased market concerns about the escalation of regional conflict, putting short-term pressure on the dollar and driving a rebound in the pound. However, tensions between the US and Iran remain, and uncertainties in the energy market could reignite safe-haven demand.
The core focus of the foreign exchange market recently remains on developments in the Middle East and policy expectations of major central banks. Following the ceasefire agreement reached between Lebanon and Israel after negotiations in Washington, market concerns about a further escalation of the regional conflict have eased. Improved risk appetite has prompted some safe-haven funds to flow out of the dollar market, ending the dollar index's previous upward trend and providing short-term support for the pound against the dollar.
However, the market remains highly vigilant about the future situation in the Middle East. Although there are signs of easing tensions along the Lebanese-Israeli border, the tensions between the United States and Iran have not improved significantly.
Meanwhile, negotiations between the United States and Iran regarding the nuclear issue and the safety of shipping in the Strait of Hormuz have yet to yield any substantial breakthroughs. Market concerns persist that any new military conflict could impact global energy supplies and further drive up international oil prices. The Strait of Hormuz handles approximately 20% of global seaborne crude oil transport; disruptions to this transport would create new supply pressures on the international energy market. Rising energy prices would not only push up global inflation but could also force major central banks to maintain tight monetary policies for an extended period.
The market is currently readjusting its assessment of the Federal Reserve's future interest rate path. Due to the continued resilience of US economic data, coupled with increased inflation risks from rising energy prices, investor expectations for further tightening by the Fed have clearly intensified. Market estimates indicate that traders are increasingly betting on future Fed rate hikes, pushing US Treasury yields high and providing solid support for the US dollar. Although the dollar has recently corrected due to a decline in safe-haven demand, its interest rate advantage still allows it to maintain a relatively strong position.
In contrast, the UK's economic growth outlook still faces certain challenges. High interest rates are putting pressure on consumption and the housing market, while business investment remains relatively weak. Although the Bank of England remains cautious in controlling inflation, the market generally believes its policy space is more limited than that of the Federal Reserve. The market is now turning its attention to the upcoming US non-farm payroll report. As a key indicator of the US economic situation, the non-farm payroll data will directly influence market judgments on the future policy direction of the Federal Reserve.
If job growth continues to be strong, it could further reinforce market expectations of a prolonged high-interest-rate environment, thus driving the dollar higher again. Conversely, if the job market shows clear signs of slowing, it could weaken the dollar's advantage and give the pound a further chance to rebound. From an overall market sentiment perspective, the pound/dollar exchange rate is currently in a situation of both short-term rebound and medium- to long-term pressure. On the one hand, weakening safe-haven buying of the dollar is supporting the pound; on the other hand, expectations of a Fed rate hike and Middle East risks remain favorable for the dollar's performance. Therefore, the market may continue to fluctuate before the release of key economic data.
From a daily chart perspective, the GBP/USD pair remains in a consolidation phase at high levels. While the price is holding above major moving averages, recent upward momentum has weakened. The MACD indicator is above the zero line, but the red histogram bars are shortening, indicating a slowdown in the upward trend. The RSI indicator has fallen back to around 60, suggesting that market sentiment is gradually returning to rationality from extreme optimism. Currently, key support levels to watch are 1.3350 and 1.3280, while resistance levels are 1.3480 and 1.3550.
From a 4-hour chart perspective, the exchange rate has been consolidating around the 1.3400 level recently. The MACD indicator is repeatedly hovering around the zero line, indicating that the short-term market direction is still unclear. The RSI remains fluctuating around 50, showing a relatively balanced power between bulls and bears. If the price breaks through the 1.3480 resistance, it may further challenge the 1.3550 area; if it falls below the 1.3350 support, it may fall back to around 1.3280 or even 1.3200.
Editor's Summary : The current movement of the pound against the dollar is mainly influenced by both changes in risk aversion and expectations regarding Federal Reserve policy. The ceasefire agreement between Lebanon and Israel eased market concerns about the escalation of regional conflict, putting short-term pressure on the dollar and driving a rebound in the pound. However, tensions between the US and Iran remain, and uncertainties in the energy market could reignite safe-haven demand.
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