The British pound (GBP/USD) traded relatively steadily in early Asian trading on Monday, fluctuating around 1.3450. The market remains in a complex environment influenced by multiple factors. On one hand, escalating tensions in the Middle East are fueling risk aversion, limiting the performance of risk assets such as the pound. On the other hand, easing inflationary pressures in the US reduce the likelihood of further monetary tightening by the Federal Reserve, thus limiting the dollar's upside potential. Recent market focus has been on the tense relationship between the United States and Iran. The US has stated that another US service member has died in related operations over the past two days, further increasing the number of US casualties. According to US Central Command, a US service member died while handling a downed Iranian drone in northern Iraq, while two US service members were killed in a previous attack in Jordan, with others still missing. With the continued military operations between the two sides, the market is concerned that regional risks may escalate further. Over the past week, these operations have expanded from traditional military targets to critical infrastructure sectors such as bridges, energy facilities, and ports, prompting investors to reassess the global risk environment. For the foreign exchange market, declining risk sentiment typically puts pressure on highly volatile currencies such as the British pound. As one of the risk-sensitive currencies, the pound tends to flow into traditional safe-haven assets like the US dollar when global demand for safe havens increases. Therefore, if the situation in the Middle East continues to deteriorate, GBP/USD may face some downward pressure in the short term. However, the US dollar is also currently affected by changes in expectations regarding US monetary policy. Recent US consumer and producer inflation data both indicate that price pressures have eased, and market bets on a near-term Fed rate hike have significantly decreased. Market research indicates that the market expects a 14% probability of a Federal Reserve rate hike in July, lower than the previous week's expectation of around 25%. Investors also anticipate a cumulative rate hike of approximately 30 basis points by the end of the year. This cooling of Fed policy expectations limits further upside potential for the dollar. Previously, due to recurring inflation and rising energy prices, the market had reassessed the path of US interest rates, but recent improved data has led some investors to reduce their bets on rapid tightening. Meanwhile, UK economic data is becoming a crucial indicator for the pound's future movement. The market will focus on the upcoming UK employment report, including changes in employment, the unemployment rate, and wage growth. A strong labor market could strengthen the Bank of England's case for maintaining a tight policy and provide support for the pound; however, a significant cooling of the labor market could increase market concerns about a UK economic slowdown. From a global market perspective, GBP/USD is currently in a balance between safe-haven demand for the dollar and expectations of a Fed policy shift. If geopolitical risks continue to escalate, the dollar may receive support from safe-haven flows; however, if US economic data continues to weaken while the market re-bets on a rate-cutting cycle, the pound may regain upward momentum. Looking ahead, three key areas need to be monitored: first, whether the situation in the Middle East will escalate further; second, the performance of the UK job market; and finally, whether US economic data will continue to influence expectations regarding Federal Reserve policy. From a daily chart perspective, GBP/USD is currently maintaining a high-level consolidation, trading around 1.3450, with bulls and bears still vying for direction. The daily chart shows that the previous upward trend has slowed, but the pair remains near the medium-term moving average, and the market structure has not yet shown significant weakness. Currently, the key support level to watch is the 1.3400-1.3350 area. If this area holds, it could become a crucial level for the bulls to reorganize their rebound. Resistance levels to watch are the 1.3500 level and the 1.3550 area. A break and hold above 1.3550 could lead to a further test of the 1.3600 area. Technically, the MACD momentum has weakened, and the RSI is in neutral territory, indicating that the market is awaiting new fundamental catalysts. From a 4-hour chart perspective, GBP/USD is currently in a short-term consolidation phase, with the price fluctuating around 1.3450. Short-term moving averages are gradually flattening, indicating a lack of clear market direction. The RSI indicator remains at a neutral level, suggesting a temporary balance between buying and selling forces. A break above the 1.3480-1.3500 area could open up upward potential in the short term, targeting 1.3550; a break below 1.3400 could trigger a technical pullback, testing support around 1.3350. Currently, the 4-hour chart remains range-bound, and market direction will depend on UK employment data and changes in safe-haven demand for the US dollar. The GBP/USD pair is currently in a phase influenced by both macroeconomic risks and policy expectations. Escalating tensions in the Middle East have increased market demand for safe-haven assets, putting pressure on the pound. However, cooling US inflation has weakened expectations of a Fed rate hike, limiting the dollar's rise. In the short term, the pound's movement will still depend on two main factors: changes in global risk sentiment and whether UK economic data supports the Bank of England's continued tightening policy. Strong UK employment data could provide new upward momentum for the pound; however, if geopolitical risks escalate further, the dollar's safe-haven advantage may regain dominance. Investors should closely monitor the UK employment report, Fed policy signals, and global risk events. The GBP/USD pair is likely to remain in a volatile pattern until fundamentals are repriced in.