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GBP/USD steadies near 1.34 despite Oil shock, hot US inflation

  • GBP/USD hovers around 1.3400 as US CPI holds at 2.4% YoY and core at 2.5%.
  • Oil risks mount as Iran warns crude could surge to $200 per barrel.
  • Fed easing bets trimmed to ~30 bps amid sticky inflation.

The Pound Sterling (GBP) remains firm during the North American session on Wednesday, even though the Middle East conflict entered its twelfth day of hostilities. Inflation in the US boosted the Greenback’s prospects, yet GBP/USD trades at around 1.3400, virtually unchanged.

Sterling steadies as markets weigh Middle East risks against steady US CPI

Market mood is mixed as traders digest the latest developments of the US, Israel and Iran conflict. Iran's military commented that the world should be prepared for Oil to hit $200 a barrel, after three vessels were attacked on Wednesday.

In response, the International Energy Agency (IEA) recommended releasing 400 million barrels of oil to temper soaring prices amid the Middle East conflict.

Aside from geopolitical jitters, the US Consumer Price Index (CPI) in February came as expected, with headline inflation rising 2.4% YoY, unchanged from January’s print. Excluding volatile items, the so-called core CPI rose by 2.5% YoY, as expected, aligned also with the previous month’s number.

Traders trimmed bets on a Federal Reserve (Fed) rate cut in 2026 following the CPI release, as depicted by Prime Market Terminal. Money markets expect 30 basis points of easing towards December.

In the UK, the finance minister Rachel Reeves said it's too soon to take measures to shield households from soaring energy prices spurred by the Middle East conflict.

The docket in Britain was absent, yet traders should note that Oxford Economics estimates the UK inflation could be 0.4% higher if the Strait of Hormuz remains shut for up to two months.

This week, the UK economic schedule will feature a speech by the Bank of England Governor (BoE) Andrew Bailey. In the US, traders' focus shifts to Initial Jobless Claims, the Balance of Trade, and housing data.

GBP/USD Price Forecast: Technical outlook

Chart Analysis GBP/USD

In the daily chart, GBP/USD trades at 1.3399. The near-term bias is mildly bearish, as the pair holds below the confluence of the declining resistance trend line from 1.3869 and the clustered simple moving averages around 1.35, which now cap the upside after being broken earlier. Price has also slipped back under the prior ascending support line that had been guiding the advance from 1.3035, signalling waning bullish momentum and leaving recent rebounds constrained beneath the former breakout zone. The steady deterioration in the Fed Sentiment Index over recent sessions reinforces a softer risk backdrop, which aligns with the pair’s inability to reclaim the broken trend confluence.

Initial resistance emerges near 1.3430, where the descending trend line now meets the underside of the moving-average group, followed by 1.3500 as a more significant barrier if buyers stage a recovery. A daily close above 1.3500 would be needed to negate the current downside bias and reopen the 1.36 area. On the downside, immediate support is seen at 1.3360, the latest swing low, with a break exposing 1.3330 and then 1.3300. A sustained move below 1.3300 would confirm renewed selling pressure and leave the pair vulnerable to a deeper decline within the broader corrective phase.

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

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-0.16%-0.44%0.49%0.00%-2.30%-0.69%0.15%
EUR0.16%-0.30%0.66%0.15%-2.17%-0.55%0.29%
GBP0.44%0.30%0.96%0.45%-1.88%-0.26%0.58%
JPY-0.49%-0.66%-0.96%-0.46%-2.76%-1.15%-0.33%
CAD-0.01%-0.15%-0.45%0.46%-2.32%-0.70%0.13%
AUD2.30%2.17%1.88%2.76%2.32%1.65%2.54%
NZD0.69%0.55%0.26%1.15%0.70%-1.65%0.84%
CHF-0.15%-0.29%-0.58%0.33%-0.13%-2.54%-0.84%

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.

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