Rising political uncertainty in the UK, coupled with a hawkish stance from the Federal Reserve, kept the pound sterling trading near its lows against the dollar.
2026-06-22 10:30:19
The British pound rebounded against the US dollar in Asian trading on Monday, rising to around 1.3235 at one point, essentially filling the gap left by the lower opening at the beginning of the week. However, the overall rebound was limited, with bulls failing to mount sustained momentum, and market sentiment remaining cautious.
The main reason supporting the pound's short-term rebound came from signs of a temporary easing of tensions in the Middle East. Qatar and Pakistan, acting as mediators, announced a 60-day roadmap aimed at facilitating a final peace agreement between the United States and Iran. This news alleviated some of the market's safe-haven demand, causing the dollar index to retreat slightly from its highs, thereby driving a technical rebound in the pound against the dollar.
However, market concerns about geopolitical risks have not completely subsided. Iran closed the Strait of Hormuz again last weekend in response to a new round of Israeli military operations in Lebanon. Meanwhile, Iranian negotiators withdrew from related talks in Switzerland in protest against the hardline stance of the United States. The market believes that while there are expectations of easing tensions in the Middle East, the actual risks remain, and safe-haven flows continue to support the US dollar.
Meanwhile, the Federal Reserve's policy outlook continues to support the dollar. With persistently resilient US inflationary pressures and the potential for energy price volatility to push up future inflation expectations, market expectations for the Fed to maintain high interest rates further this year continue to rise. The Fed's recent hawkish signals have also kept the dollar relatively strong overall.
Besides the US dollar factor, changes in the UK's domestic political situation are also putting pressure on the pound. Market surveys indicate that Prime Minister Starmer may announce his resignation as early as Monday, with former Manchester Mayor Andy Burnham considered a potential successor. Market concerns are that these political shifts could increase uncertainty about future economic policies, thereby weakening investor confidence in pound-denominated assets.
Meanwhile, UK economic growth momentum remains weak, and market expectations for further interest rate hikes by the Bank of England continue to cool. As labor market and consumption data gradually slow, investors are beginning to bet that the Bank of England will focus more on economic growth risks rather than further tightening monetary policy.
From a market pricing perspective, the US dollar is supported by both safe-haven demand and hawkish monetary policy, while the British pound faces pressure from both political uncertainty and cooling expectations for monetary policy. Therefore, even if a short-term technical rebound occurs, the market tends to view any rise as an opportunity to sell at a higher price.
The market's focus will now be on the progress of US-Iran negotiations, developments in the Middle East, and the latest political developments in the UK. Meanwhile, US economic data and speeches by Federal Reserve officials this week will also significantly impact the dollar's trajectory.
From a daily chart perspective, the GBP/USD pair has been in a clear correction trend since its previous high. Although the exchange rate filled some of the gap on Monday, it remains below key moving averages, indicating that the bearish pattern has not fundamentally changed. The 1.3300 area is currently a significant short-term resistance level. If it fails to break through and hold above this area, the exchange rate may continue its downward trend. Key support levels to watch are 1.3200 and 1.3150. A break below these levels could lead to a further test of the 1.3100 level. Overall, before a trend reversal, any rebounds should be viewed as corrective movements within the correction process.
From the 4-hour chart, the exchange rate has seen a technical rebound after a continuous decline, but the price has not yet entered the previous densely traded area, indicating limited market willingness to chase the rally. The short-term moving average system remains in a bearish alignment, and the rebound strength is relatively mild. If it fails to break through the resistance area of 1.3260 to 1.3300, there is a possibility of another pullback to test the 1.3200 support level. Overall, the short-term trend is biased towards consolidation and correction, but the medium-to-short-term trend remains bearish, and the trading strategy should still be based on the idea that rallies will face resistance.
Editor's Summary : The pound's rebound against the dollar at the beginning of the week was mainly driven by some progress in the US-Iran peace talks. However, Middle East geopolitical risks have not been completely eliminated, and expectations of a hawkish Federal Reserve policy continue to support the dollar. Meanwhile, rising domestic political uncertainty in the UK and a cooling of expectations for a Bank of England rate hike continue to weigh on the pound. Under the influence of multiple negative factors, the current rebound is more of a technical correction than a trend reversal. If the exchange rate fails to break through key resistance levels, it still faces the risk of further declines. Close attention should be paid to the impact of US monetary policy expectations and UK political developments on market sentiment.
The main reason supporting the pound's short-term rebound came from signs of a temporary easing of tensions in the Middle East. Qatar and Pakistan, acting as mediators, announced a 60-day roadmap aimed at facilitating a final peace agreement between the United States and Iran. This news alleviated some of the market's safe-haven demand, causing the dollar index to retreat slightly from its highs, thereby driving a technical rebound in the pound against the dollar.
However, market concerns about geopolitical risks have not completely subsided. Iran closed the Strait of Hormuz again last weekend in response to a new round of Israeli military operations in Lebanon. Meanwhile, Iranian negotiators withdrew from related talks in Switzerland in protest against the hardline stance of the United States. The market believes that while there are expectations of easing tensions in the Middle East, the actual risks remain, and safe-haven flows continue to support the US dollar.
Meanwhile, the Federal Reserve's policy outlook continues to support the dollar. With persistently resilient US inflationary pressures and the potential for energy price volatility to push up future inflation expectations, market expectations for the Fed to maintain high interest rates further this year continue to rise. The Fed's recent hawkish signals have also kept the dollar relatively strong overall.
Besides the US dollar factor, changes in the UK's domestic political situation are also putting pressure on the pound. Market surveys indicate that Prime Minister Starmer may announce his resignation as early as Monday, with former Manchester Mayor Andy Burnham considered a potential successor. Market concerns are that these political shifts could increase uncertainty about future economic policies, thereby weakening investor confidence in pound-denominated assets.
Meanwhile, UK economic growth momentum remains weak, and market expectations for further interest rate hikes by the Bank of England continue to cool. As labor market and consumption data gradually slow, investors are beginning to bet that the Bank of England will focus more on economic growth risks rather than further tightening monetary policy.
From a market pricing perspective, the US dollar is supported by both safe-haven demand and hawkish monetary policy, while the British pound faces pressure from both political uncertainty and cooling expectations for monetary policy. Therefore, even if a short-term technical rebound occurs, the market tends to view any rise as an opportunity to sell at a higher price.
The market's focus will now be on the progress of US-Iran negotiations, developments in the Middle East, and the latest political developments in the UK. Meanwhile, US economic data and speeches by Federal Reserve officials this week will also significantly impact the dollar's trajectory.
From a daily chart perspective, the GBP/USD pair has been in a clear correction trend since its previous high. Although the exchange rate filled some of the gap on Monday, it remains below key moving averages, indicating that the bearish pattern has not fundamentally changed. The 1.3300 area is currently a significant short-term resistance level. If it fails to break through and hold above this area, the exchange rate may continue its downward trend. Key support levels to watch are 1.3200 and 1.3150. A break below these levels could lead to a further test of the 1.3100 level. Overall, before a trend reversal, any rebounds should be viewed as corrective movements within the correction process.
From the 4-hour chart, the exchange rate has seen a technical rebound after a continuous decline, but the price has not yet entered the previous densely traded area, indicating limited market willingness to chase the rally. The short-term moving average system remains in a bearish alignment, and the rebound strength is relatively mild. If it fails to break through the resistance area of 1.3260 to 1.3300, there is a possibility of another pullback to test the 1.3200 support level. Overall, the short-term trend is biased towards consolidation and correction, but the medium-to-short-term trend remains bearish, and the trading strategy should still be based on the idea that rallies will face resistance.
Editor's Summary : The pound's rebound against the dollar at the beginning of the week was mainly driven by some progress in the US-Iran peace talks. However, Middle East geopolitical risks have not been completely eliminated, and expectations of a hawkish Federal Reserve policy continue to support the dollar. Meanwhile, rising domestic political uncertainty in the UK and a cooling of expectations for a Bank of England rate hike continue to weigh on the pound. Under the influence of multiple negative factors, the current rebound is more of a technical correction than a trend reversal. If the exchange rate fails to break through key resistance levels, it still faces the risk of further declines. Close attention should be paid to the impact of US monetary policy expectations and UK political developments on market sentiment.
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