|

British Pound slips for second straight day as Oil spike revives inflation fears

  • WTI jumps above $80 as Iran war risks intensify.
  • UoM sentiment improves, while inflation expectations ease modestly.
  • Burnham transition and UK data shape Sterling’s next move.

The Pound Sterling retreats during the North American session, down 0.22% against the Greenback, as geopolitical tensions remained high, triggering a jump in Oil prices and heightening fears of a reacceleration of inflation. The GBP/USD trades at 1.3449 after peaking near 1.3480.

GBP/USD eases as Middle East tensions lift Dollar demand

Hostilities in the Middle East continued with the US attacking Iranian infrastructure, according to Iran’s army spokesperson, who warned that attacks on Oil facilities could trigger retaliation, saying that “either all countries in the region can export Oil or no one can.” As tensions rose, Oil prices jumped, with WTI, the US crude Oil benchmark, gaining over 1.50% to $80.78 per barrel.

US economic data revealed that Consumer Sentiment improved due to the dip in gasoline prices at the pump, according to the University of Michigan (UoM): The survey revealed that the index rose from 50.7 to 54 in July. Meanwhile, inflation expectations for one year dipped from 4.6% in June to 4.2%, and for five years were steady at 3.3%.

Meanwhile, expectations that the Federal Reserve (Fed) would tighten monetary policy had tempered, following US inflation data on the consumer and producer side. Both readings showed a modest cooldown, but Iran’s war escalation has kept WTI up 13% so far this month.

Money markets had priced in a nearly 61% chance of a Fed rate hike at the October 28 meeting, according to Prime Terminal data. For the July meeting, the central bank is expected to hold rates unchanged with odds standing at 76%.

In the UK, Andy Burnham is set to become the new Prime Minister next week. Rumours that he would pick Shabana Mahmood as the Chancellor of the Exchequer were cheered by investors, as the Pound holds onto weekly gains of 0.4%.

Next week's US & UK data

The UK economic schedule will feature the coronation of PM Andy Burnham, the release of employment figures, inflation data, and Retail Sales. Across the pond, the US economic docket will feature jobs data and S&P Global Flash PMIs, as Fed officials enter their blackout period ahead of the July 29 policy meeting.

GBP/USD price forecast: Technical outlook

Chart Analysis GBP/USD
GBP/USD daily chart

In the daily chart, GBP/USD trades at 1.3451, with a mildly bullish near‑term bias as spot holds above the latest reading of the Simple Moving Average (SMA) triple at 1.3381. The pair is advancing within the broader structure but remains capped by a descending resistance trendline coming in around 1.3487, while the former upward support trendline has turned into an additional barrier near 1.3498. A constructive tone is supported by the Relative Strength Index (14) hovering around 56.9, hinting at steady buying interest rather than overbought conditions.

On the topside, initial resistance is located at the downward trendline break price at 1.3487, followed by the overhead former support trendline near 1.3498, where a daily close above would open the door to a more decisive continuation of the recovery. On the downside, immediate support is seen at the 1.3451 area, with stronger underlying demand aligning with the SMA triple around 1.3381. A slide back through this latter zone would suggest the bullish bias is fading and expose the pair to deeper corrective pressure.

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

Pound Sterling Price This week

The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the Japanese Yen.

USDEURGBPJPYCADAUDNZDCHF
USD-0.32%-0.47%0.44%-1.06%-0.56%-1.45%-0.07%
EUR0.32%-0.16%0.78%-0.75%-0.29%-1.14%0.26%
GBP0.47%0.16%0.87%-0.58%-0.13%-0.98%0.46%
JPY-0.44%-0.78%-0.87%-1.57%-1.00%-1.92%-0.56%
CAD1.06%0.75%0.58%1.57%0.58%-0.36%1.05%
AUD0.56%0.29%0.13%1.00%-0.58%-0.85%0.46%
NZD1.45%1.14%0.98%1.92%0.36%0.85%1.46%
CHF0.07%-0.26%-0.46%0.56%-1.05%-0.46%-1.46%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

More from Christian Borjon Valencia
Share:

Editor's Picks

CLARITY Act approval odds sink fast ahead of Congressional hearing
The United States (US) House Financial Services Committee’s Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence (AI) is holding a hearing titled “Building the Future of Finance: How the CLARITY Act Unlocks Innovation” on Friday.
Week ahead – Could technology earnings revive equities as geopolitical risks linger?

Oil prices rise, but the dollar posts losses as Middle East tensions persist. US earnings, the ECB and UK newsflow dominate next week’s agenda. US equity markets face a pivotal test as focus shifts to technology earnings.

-0.4%: Why the biggest CPI drop since 2020 couldn't buy back a single cut

The June CPI fell 0.4% on the month, the largest one-month decline since April 2020, dragging the annual rate to 3.5% from May's 4.2% and snapping a three-month acceleration streak. Core prices went nowhere, flat on the month and down to 2.6% YoY, both under consensus.