GBP/USD: Bearish Continuation Likely After Bounce
- The British pound is feeling the heat, trading near a four-week low against the U.S.
- Political uncertainty in the United Kingdom, coupled with increased demand for safe-haven assets amid ongoing geopolitical tensions, has contributed too the pound's struggles.
- The BoE's recent monetary policy meeting saw interest rates remain unchanged, as anticipated.
The GBP/USD pair faces strong headwinds as the British pound struggles against the U.S. dollar, hitting a four-week low. Political uncertainty, safe-haven demand, and a hawkish Federal Reserve are all weighing on the pound sterling. The Bank of England‘s steady approach to interest rates, coupled with inflation figures still above target, further pressures the GBP/USD exchange rate. Technical analysis points towards a bearish continuation with key levels to watch at 1.3360 and 1.3240, although a minor correction may precede further declines.Learn more about the factors impacting the market at News Directory 3, and get the latest updates. Discover what’s next …
Pound Sterling Under Pressure as Dollar Strengthens, BoE Holds Steady
Updated June 19, 2025
The British pound is feeling the heat, trading near a four-week low against the U.S. dollar. On Thursday, the GBP/USD pair touched 1.3403 as a strengthening dollar and the Bank of England’s (BoE) cautious stance create headwinds.
Political uncertainty in the United Kingdom, coupled with increased demand for safe-haven assets amid ongoing geopolitical tensions, has contributed too the pound’s struggles. The Israel-Iran conflict has especially fueled this demand.
The BoE’s recent monetary policy meeting saw interest rates remain unchanged, as anticipated. Attention now turns to the central bank’s forward guidance, especially considering rising oil prices that could complicate the inflation outlook and possibly delay future rate cuts. Markets are still factoring in two rate cuts for 2025.
Adding to the pressure on the pound, recent UK macroeconomic data has been soft, and the Federal Reserve maintains a hawkish stance. This combination has diminished the pound’s yield appeal to investors.
Inflation figures released earlier showed annual inflation easing to 3.4% in May,down from 3.5% in April. Core inflation also dipped to 3.5% from 3.8%. However, these figures remain significantly above the BoE’s 2% target, suggesting limited progress toward achieving the central bank’s goal. This likely reinforces the BoE’s cautious approach to potential rate cuts.
Technical analysis suggests further downward movement for the GBP/USD. The pair is targeting 1.3360, with a potential correction toward 1.3496 before another decline toward 1.3240. The MACD indicator supports this outlook,with its signal line below zero and pointing downward.
On the shorter-term H1 chart, the pair is forming a third wave of decline, targeting 1.3373. A pullback toward 1.3494 is expected before a potential fifth wave lower to 1.3360. The Stochastic oscillator reinforces this scenario, with its signal line below 50 and trending down toward 20.
What’s next
The GBP/USD exchange rate faces continued downward pressure. Traders should watch key levels at 1.3360 and 1.3240. A short-term correction may occur before further declines, a scenario supported by current technical indicators.