British Pound rises as US-Iran talks offset UK political shock

The Pound Sterling (GBP) advances some 0.14% on Monday as US-Iran negotiations laid a “good foundation,” according to US Vice President JD Vance, after ending the first round of talks in Switzerland. Meanwhile, UK Prime Minister Keir Starmer announced its resignation, though the move didn’t spill over to GBP/USD, which trades solidly at around 1.3250.

GBP/USD gains as diplomacy headlines cushion Starmer resignation risks

Market sentiment improved since the US and Iran delegations met for negotiations, yet Tehran called for a closure of the Strait of Hormuz due to Israel's continued attacks on Lebanon. This prompted a reaction by US President Donald Trump, who threatened to attack Tehran if they fulfill its threats about Hormuz.

Political turmoil didn’t weigh on the Pound, which traded higher throughout the day despite Prime Minister Keir Starmer stepping aside and opening nominations for his replacement on July 9.  The leader to succeed him is Andy Burnham, who was recently sworn in as a member of the UK Parliament.

Fears that Andy Burnham would become the new PM triggered a jump in UK Gilts earlier this year, but so far, his team has said that he will adhere to the Chancellor Rachel Reeves' fiscal rules.

Analysts cited by Reuters said, “We still need to get clarity on what will change if the fiscal rules stay the same. So, from a market¡s point of view, there will be a laser focus on the costs of any policy changes and what they mean for economic growth.”

In the US, the economic docket is light, though traders' eyes are on Flash PMIs, the final reading of Q1 2026 GDP, and the Federal Reserve’s preferred inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index. In the UK, investors' focus would be on political issues, along with speeches by Bank of England (BoE) speakers.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3260, keeping a bearish near-term tone as spot holds below the clustered simple moving averages (SMA) from the Moving Average Triple now seated around 1.3459. The failure to sustain the former upwards support trend line, broken near 1.3441, reinforces a downside bias, while the Relative Strength Index (RSI) at about 38 stays in weak territory, suggesting sellers retain the initiative despite intermittent rebounds.

On the topside, the Moving Average Triple at roughly 1.3459 forms the first significant resistance, aligned with the broader downwards resistance trend line drawn from the 1.3869 region, which continues to cap recovery attempts. On the downside, price is drifting back toward the broader ascending-support structure that originates near 1.3159 and recent lows just above 1.3200, where another test of that zone would be needed to signal whether bears can extend the slide or if the pair instead stabilizes into a broader consolidation.

(The technical analysis of this story was written with the help of an AI tool.)