GBP/USD held steady at 1.3426 on Tuesday, with the pound lagging behind other currencies despite a broader decline in the dollar.
Market sentiment improved following a drop in oil prices, as investors grew hopeful that the US and Iran may reach an agreement to restore shipping through the Strait of Hormuz. Such a development would reduce inflation risks and the likelihood of further rate hikes.
Additional pressure on oil prices came from Donald Trump’s statement on Monday regarding the resumption of negotiations with Tehran, which eased fears of a fresh wave of conflict.
The outcome of last week’s Bank of England meeting reinforced the view that the regulator is in no rush to tighten policy. As a result, markets have scaled back expectations of a rate hike in 2026, which continues to weigh on sterling.
Technical analysis
On the H4 GBP/USD chart, the market is forming a move lower towards 1.3380. A broad consolidation range around the 1.3440 level is taking shape. An upside breakout would open the way for a move towards 1.3500, while a downside breakout would suggest a move towards 1.3300, with scope for the trend to extend to 1.3190. The MACD indicator supports this scenario, with its signal line above zero and pointing downwards.
On the H1 chart, the market has formed a compact consolidation range around the 1.3420 level, currently extending down to 1.3418. A move higher towards 1.3442 is expected, followed by a decline to 1.3380. The Stochastic oscillator confirms this scenario, with its signal line below 50 and pointing downwards towards 20, indicating increasing short-term downside pressure.
Conclusion
GBP/USD is struggling to gain traction, with sterling underperforming compared to other currencies despite a broadly weaker dollar. The pound has failed to benefit from improving risk sentiment, driven by hopes of a US–Iran deal that could ease oil prices and inflation concerns. However, the Bank of England’s cautious stance, reinforced by last week’s policy meeting, continues to weigh on the currency, with markets scaling back expectations for 2026 rate hikes. Technically, the pair appears to be consolidating near 1.3420, with potential for a pullback towards 1.3380–1.3300. The pound’s relative weakness may persist until clearer signals emerge on the BoE’s policy trajectory or geopolitical tensions ease further.
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