British Pound climbs as Hormuz talks stall, US CPI in focus
- GBP/USD rises as traders await US inflation and UK GDP.
- Hormuz deadlock lifts Oil, reviving central bank tightening risks.
- BoE and Fed bets swing with energy price volatility.
The Pound Sterling (GBP) advances during the North American session on Monday, up 0.2% as markets digest developments in the Middle East and await crucial inflation data in the United States (US). The GBP/USD pair trades at 1.3520 after bouncing off daily lows of 1.3483.
GBP/USD advances despite a firmer Dollar as Oil jumps
Negotiations between Oman and Iran have continued but have so far failed to provide relief for financial markets, as evidenced by rising Oil prices. West Texas Intermediate (WTI) rises over 4.5% to $80.69 per barrel. In the meantime, the US Dollar Index (DXY), which tracks the value of six currencies versus the American dollar, is up 0.1% at 99.73.
Geopolitics and its impact on energy prices continued to drive market mood, with investors attentive to the reopening of the Strait of Hormuz.
Data on both sides of the Atlantic remains scarce, but it will gather pace on Tuesday. The UK economic docket will feature the BRC Like-For-Like Retail Sales for July, which are projected to dip from 1.7% to 1.5% YoY. On Thursday, traders will eye the release of the Gross Domestic Product (GDP) figures on Thursday, which are expected to show that the economy held firm.
In the US, the schedule will provide an update to inflation figures on the consumer and producer side, alongside Initial Jobless Claims on Thursday, which would be keenly scrutinized by investors, following a dismal Nonfarm Payrolls (NFP) report last week, which revealed that the economy slashed 23K jobs, and featured a downward revision for May and June figures.
The lack of progress in Hormuz suggests that money markets expect 22 basis points of tightening by the Federal Reserve (Fed) toward the end of 2026, up from 17 basis points expected last Friday, according to Prime Terminal data.
Regarding the Bank of England (BoE), fluctuations in energy prices due to the US-Iran conflict keep traders' odds swinging between holding or increasing rates toward the end of the year. So far, traders expect a 25-basis-point rate hike from the BoE by year-end.
GBP/USD price forecast: Technical outlook
In the daily chart, GBP/USD trades at 1.3525, holding a constructive bullish bias as it remains above a cluster of reclaimed supports while momentum improves. The latest Simple Moving Average (SMA) from the triple set sits around 1.3367. They are now acting as underlying demand alongside former downward and upward trendline barriers near 1.3514 and 1.3432 that have been turned into support. This suggests dips could be bought, while the pair stays above this broader base. The Relative Strength Index (RSI) around 62 reinforces the bullish tone without yet signaling overbought conditions.
On the downside, initial support is seen at the former downward trendline break near 1.3514, followed by the prior resistance trendline around 1.3432 and the SMA zone close to 1.3367, with an additional structural floor emerging from the lower upward trendline near 1.3332. On the topside, the next notable resistance comes at the higher upward trendline break around 1.3566, and a sustained close above this level would open the door for further gains toward higher levels beyond the recent range.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Author
Christian Borjon Valencia
FXStreet
Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.
