The British pound rebounded against the US dollar during Thursday's Asian trading session, regaining the 1.3300 level. After falling to its lowest level since early April in the previous session, the market experienced a technical correction, with profit-taking in the US dollar being the main driver of the rebound.

US President Donald Trump and Iranian President Masoud Pezechiyan have signed a memorandum of understanding to end the regional conflict. The two sides will work to restore normal navigation in the Strait of Hormuz and begin negotiations for a final agreement over the next 60 days. Trump subsequently stated that the timeline for negotiations on the Iranian nuclear issue is not absolute, further strengthening market confidence in a continued de-escalation of the situation.

As a result, global risk appetite improved, and some safe-haven funds flowed out of the US dollar. The US dollar index, after reaching multi-month highs driven by the Federal Reserve's hawkish stance, retreated, providing some support for the pound against the dollar. However, the overall fundamentals of the US dollar remain relatively solid. At its latest policy meeting, the Federal Reserve kept the federal funds rate unchanged at 3.50%-3.75%, while revising its policy statement, removing key statements about future rate cuts, signaling a more hawkish stance.

Meanwhile, the Federal Reserve's latest economic projections show that the median forecast for the federal funds rate at the end of 2026 has risen to 3.8%, higher than the 3.4% projected in March. This change implies that most policymakers believe there is still room for at least one more rate hike. The market generally believes that US interest rates will remain high for an extended period, thus continuing to support the dollar.

In the UK, the latest inflation data weakened market expectations for further interest rate hikes by the Bank of England. Data released by the UK Office for National Statistics showed that the UK's Consumer Price Index (CPI) rose 2.8% year-on-year in May, unchanged from the previous month and in line with market expectations. The more closely watched core inflation indicator rose 2.6% year-on-year, higher than the previous 2.5%, but lower than market expectations, indicating that underlying inflationary pressures are gradually easing. Following the data release, market bets on further monetary tightening by the Bank of England cooled somewhat.

Analysts believe that the UK economy's growth momentum remains weak, while inflation has gradually returned to near the target range, making the Bank of England more inclined to maintain its current policy stance. As expectations of interest rate hikes weaken, the interest rate support for the pound is also declining.

Investors are now turning their attention to the Bank of England's interest rate decision later today. The market expects the Bank of England to maintain current interest rates, and future policy guidance will be a key factor in determining the pound's direction. If the Bank of England releases a dovish signal, the pound may face renewed pressure; conversely, if the policy statement still emphasizes inflation risks, it is expected to provide short-term support for the pound.

Overall, the pound is currently influenced by both improved risk sentiment and differing expectations regarding US and UK monetary policy. While a short-term rebound is underway, the upside potential for the pound may be relatively limited given the dollar's continued interest rate advantage.

From a daily chart perspective, the GBP/USD pair has been declining since breaking below a key support level and is currently still trading within a medium-term downtrend channel. Although the price has rebounded above 1.3300, the overall trend has not yet shown clear signs of reversal. The moving average system is gradually turning bearish, indicating a weak medium-term outlook. The MACD continues to trade below the zero line, and while bearish momentum has weakened somewhat, it still holds the upper hand. If the price fails to break above the 1.3400 area, the rebound is more likely to be seen as a technical correction. Key resistance levels to watch are 1.3340, 1.3400, and 1.3470; key support levels are 1.3260, 1.3200, and 1.3150.

From the 4-hour chart, the exchange rate has undergone oversold correction after a continuous decline, with the MACD forming a golden cross at a low level, indicating a recovery in short-term rebound momentum. However, the price is still suppressed by the downtrend line and has not yet broken through the previous densely traded area. If it can effectively hold above 1.3340, it may further test the 1.3400 area; if the rebound is blocked and breaks below the 1.3260 support, it may reopen downside potential and seek support near 1.3200. Overall, the current trend is more likely a rebound after the decline than a trend reversal.

Editor's Summary : The short-term rebound in the pound against the dollar mainly benefited from profit-taking in the dollar and improved market risk sentiment. However, the core factor influencing the medium-term trend of the exchange rate remains the divergence in the monetary policy outlook between the US and the UK. The Federal Reserve maintained a hawkish stance and hinted at the possibility of a rate hike this year, while declining inflation in the UK reduced the necessity for the Bank of England to further tighten policy. The market focus will now be on the Bank of England's interest rate decision and subsequent policy guidance. If the Bank of England releases more cautious policy signals, and US economic data continues to show resilience, the dollar's advantage may still dominate the market, limiting the pound's upside potential. From a technical perspective, 1.3400 remains a crucial resistance level that will determine whether the pound can escape its weak trend, while 1.3260 has become a short-term dividing line between bullish and bearish sentiment.