The British pound (GBP/USD) stabilized slightly in Asian trading on Tuesday, trading around 1.3430, ending a three-day losing streak. The pair had earlier risen to a two-month high near 1.3550, but the gains cooled as markets reassessed the outlook for monetary policy in both the UK and the US, as well as changes in the UK political environment. The core factor currently influencing the pound's exchange rate against the dollar remains the policy divergence between the Bank of England and the Federal Reserve. While the market widely expects both central banks to adjust interest rate policies in the future, differences in inflation resilience, job market performance, and economic growth prospects will determine capital flows and exchange rate performance. In the UK, the market is awaiting a series of upcoming economic data releases to determine whether the Bank of England has sufficient reason to maintain high interest rates. Job market data, the consumer price index, and retail sales data will be crucial indicators of the UK's economic health. Whether UK inflationary pressures persist will directly impact market expectations regarding the pace of future interest rate cuts by the Bank of England . Recent high international oil prices have kept market concerns about energy costs driving inflation higher, strengthening investors' expectations that the Bank of England will maintain higher interest rates for a longer period. Meanwhile, changes in the UK political environment are also a focus of market attention. Andy Burnham officially became Prime Minister of the United Kingdom, becoming the seventh Prime Minister in the past decade and the second Labour Prime Minister since 2024. He stated that the new government will emphasize fiscal discipline while considering measures such as increasing personal tax exemptions to alleviate pressure on residents. The market is currently focused on the new government's fiscal policy direction, particularly the Chancellor of the Exchequer and future budget plans. If the UK government can maintain market confidence, it may reduce the fiscal risk premium, providing some support for the pound; however, if fiscal policy increases market concerns, it could limit the pound's upside potential. Regarding the US dollar, its current movement is also influenced by multiple factors. Recent US inflation data has cooled somewhat, allowing the market to maintain expectations of future Fed rate cuts, thus limiting a significant rise in the dollar and providing some support for the pound. However, global risk events and changes in the energy market may still temporarily boost demand for the dollar as a safe haven. When market risk appetite declines, the dollar typically receives inflows, which also limits further gains for the pound against the dollar. From a market perspective, the pound/dollar exchange rate is currently in a phase of rebalancing between bullish and bearish forces. On the one hand, hawkish expectations from the Bank of England and expectations of a shift in dollar policy provide support; on the other hand, potentially weaker UK economic data and changes in global risk sentiment put pressure on the pound. In the coming trading days, investors will focus on UK employment data, inflation reports, and retail sales performance. If data shows a decline in the resilience of the UK economy, the market may lower its expectations for the Bank of England to maintain high interest rates; conversely, if inflation remains stubborn, the pound may regain upward momentum. The daily chart for GBP/USD shows a pullback after approaching the 1.3550 area, currently finding support around 1.3430. The overall trend remains within the previous rebound structure, but short-term momentum has clearly weakened. Key support below is currently at the 1.3400 area, which is close to the recent breakout zone and short-term moving average support; a break below this level could lead to further tests of the 1.3350 and 1.3300 areas. On the upside, the first resistance level to watch is the 1.3500 psychological level; a break above this level could lead to another challenge of the previous high of 1.3550, with further resistance around 1.3650. The daily chart structure suggests that the pound needs to regain a foothold above 1.3550 to confirm a new upward trend. Looking at the 4-hour chart, GBP/USD has recently formed a high-level pullback consolidation pattern, with the price finding some support above 1.3400. The MACD indicator shows that short-term bearish momentum has weakened, and the indicator is gradually converging; the RSI indicator has entered the neutral zone after falling from a high level, indicating that the market is waiting for a new directional signal. If the price holds above 1.3400 and breaks through 1.3500, a short-term rebound may resume; however, if it falls below 1.3400, it may further adjust towards the 1.3300 area. Currently, the market still needs to pay attention to UK economic data and changes in the safe-haven demand for the US dollar. Editor's Summary: The GBP/USD pair is currently in a phase of repricing policy expectations. Whether the Bank of England maintains high interest rates, the pace of future rate cuts by the Federal Reserve, and the performance of UK economic data will jointly determine the exchange rate's direction. In the short term, the 1.3400 area is a key support level for the pound, while 1.3550 is a key resistance level for the bulls to regain control of the market. If UK inflation remains resilient, the pound may receive support from policy expectations; however, if economic data continues to be weak, the market may bet on a policy shift in advance. Overall, the GBP/USD pair remains in a volatile pattern, and its future direction will depend on changes in the UK-US interest rate differential, the stability of UK fiscal policy, and changes in global risk sentiment. Investors should pay attention to breakouts at key technical levels to determine the next trend direction.