With the Federal Reserve's decision and key UK data looming, the pound sterling fluctuated around 1.3400 against the dollar.
2026-06-16 14:09:22
The British pound (GBP/USD) ended its earlier slight rebound in Asian trading on Tuesday, falling back to around 1.3400. Although the interim peace agreement between the US and Iran improved overall market risk appetite, the market remained cautious about the timing of a full resumption of normal navigation in the Strait of Hormuz and future operational arrangements, as the official text of the agreement has not yet been released. This led some funds to continue flowing into the US dollar, supporting the dollar index's strength.
US President Trump previously announced that he had signed a memorandum of understanding to end the conflict and planned to push for the reopening of the Strait of Hormuz. According to semi-official Iranian media reports, the existing draft agreement is expected to be arranged by Iran over the next 30 days to gradually restore navigation through the strait. Although there are signs of easing tensions in the Middle East, global shipping companies remain cautious about adjusting shipping routes until the details of the agreement are fully transparent, thus uncertainty remains regarding the speed of energy supply recovery.
Meanwhile, market focus is gradually shifting to the Federal Reserve's upcoming monetary policy decision. Investors widely expect the Fed to maintain the federal funds rate at 3.50% to 3.75%, and the first press conference hosted by new Chairman Kevin Warsh will be closely watched. If the Fed releases a hawkish policy signal, the dollar may receive further support, thus putting pressure on the pound.
On the other hand, the UK will face a series of economic events this week, including inflation, employment, and retail sales data, as well as the Bank of England's latest interest rate decision. These data will directly influence market expectations regarding UK economic growth and the future path of monetary policy. Furthermore, the results of important local elections in the UK may also affect short-term market sentiment, significantly increasing the volatility of the pound.
Currently, the pound's performance is influenced by both the strength of the US dollar and domestic UK economic data. While improved market risk appetite typically favors higher-risk currencies, the dollar maintains a certain advantage in the short term, limiting the pound's upside potential, given the continued uncertainty surrounding the Federal Reserve's policy outlook.
From a daily chart perspective, the GBP/USD pair has entered a consolidation phase after recently retreating from its highs, with the exchange rate searching for short-term direction around 1.3400. The daily chart structure indicates a slowdown in the bullish trend, with signs of cooling market momentum. If the exchange rate breaks below the key support level of 1.3350, it may further test the 1.3280 and 1.3200 areas. On the upside, the first resistance level to watch is around 1.3450; a successful break above this level could lead to a retest of the 1.3520 and 1.3600 areas. Overall, the pound is likely to maintain a range-bound trading pattern ahead of major risk events.
From a 4-hour chart perspective, GBP/USD has formed a weak, high-level consolidation pattern in the short term, with short-term moving averages beginning to flatten, indicating a gradual balance between bullish and bearish forces. If the exchange rate continues to be pressured below 1.3450, there is a risk of further short-term pullback; however, if it can regain and stabilize above this level, it may resume its previous upward momentum and challenge higher resistance areas. Short-term investors should pay close attention to the direction indicated by the Federal Reserve's policy outcome and key UK economic data.
Editor's Summary : The British pound faces multiple risk events against the US dollar in the short term. On one hand, the Federal Reserve's interest rate decision and the policy stance of new Chairman Kevin Warsh will determine the dollar's future trend; on the other hand, UK inflation, employment, retail sales, and the Bank of England meeting will provide new directional guidance for the pound. Before these major events, GBP/USD may maintain a volatile pattern. If the dollar strengthens further, the exchange rate risks further correction, while better-than-expected UK economic data could help the pound regain upward momentum.
US President Trump previously announced that he had signed a memorandum of understanding to end the conflict and planned to push for the reopening of the Strait of Hormuz. According to semi-official Iranian media reports, the existing draft agreement is expected to be arranged by Iran over the next 30 days to gradually restore navigation through the strait. Although there are signs of easing tensions in the Middle East, global shipping companies remain cautious about adjusting shipping routes until the details of the agreement are fully transparent, thus uncertainty remains regarding the speed of energy supply recovery.
Meanwhile, market focus is gradually shifting to the Federal Reserve's upcoming monetary policy decision. Investors widely expect the Fed to maintain the federal funds rate at 3.50% to 3.75%, and the first press conference hosted by new Chairman Kevin Warsh will be closely watched. If the Fed releases a hawkish policy signal, the dollar may receive further support, thus putting pressure on the pound.
On the other hand, the UK will face a series of economic events this week, including inflation, employment, and retail sales data, as well as the Bank of England's latest interest rate decision. These data will directly influence market expectations regarding UK economic growth and the future path of monetary policy. Furthermore, the results of important local elections in the UK may also affect short-term market sentiment, significantly increasing the volatility of the pound.
Currently, the pound's performance is influenced by both the strength of the US dollar and domestic UK economic data. While improved market risk appetite typically favors higher-risk currencies, the dollar maintains a certain advantage in the short term, limiting the pound's upside potential, given the continued uncertainty surrounding the Federal Reserve's policy outlook.
From a daily chart perspective, the GBP/USD pair has entered a consolidation phase after recently retreating from its highs, with the exchange rate searching for short-term direction around 1.3400. The daily chart structure indicates a slowdown in the bullish trend, with signs of cooling market momentum. If the exchange rate breaks below the key support level of 1.3350, it may further test the 1.3280 and 1.3200 areas. On the upside, the first resistance level to watch is around 1.3450; a successful break above this level could lead to a retest of the 1.3520 and 1.3600 areas. Overall, the pound is likely to maintain a range-bound trading pattern ahead of major risk events.
From a 4-hour chart perspective, GBP/USD has formed a weak, high-level consolidation pattern in the short term, with short-term moving averages beginning to flatten, indicating a gradual balance between bullish and bearish forces. If the exchange rate continues to be pressured below 1.3450, there is a risk of further short-term pullback; however, if it can regain and stabilize above this level, it may resume its previous upward momentum and challenge higher resistance areas. Short-term investors should pay close attention to the direction indicated by the Federal Reserve's policy outcome and key UK economic data.
Editor's Summary : The British pound faces multiple risk events against the US dollar in the short term. On one hand, the Federal Reserve's interest rate decision and the policy stance of new Chairman Kevin Warsh will determine the dollar's future trend; on the other hand, UK inflation, employment, retail sales, and the Bank of England meeting will provide new directional guidance for the pound. Before these major events, GBP/USD may maintain a volatile pattern. If the dollar strengthens further, the exchange rate risks further correction, while better-than-expected UK economic data could help the pound regain upward momentum.
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