The British Pound (GBP) strengthened by 0.15% to trade near 1.3345 against the US Dollar (USD) during the European session on Monday, as the US Dollar faced selling pressure. This movement was attributed to renewed hopes for a diplomatic solution between the United States and Iran, following a pause in military aggression in the Middle East. The US military confirmed that further attacks on Iran would be unnecessary as the target list had been exhausted, contributing to the softer tone in the US Dollar [1].
The US Dollar Index (DXY), which measures the Greenback against six major currencies, traded 0.25% lower at approximately 101.20. US ambassador to the United Nations, Mike Waltz, stated that President Donald Trump wants to give negotiations with Iran 'a little bit of room,' while maintaining military readiness, as reported by The Guardian [1].
Investors are closely watching upcoming monetary policy announcements from the Federal Reserve (Fed) and the Bank of England (BoE), scheduled for Wednesday and Thursday, respectively. Both central banks are expected to keep interest rates unchanged. The BoE's interest rate decision is particularly significant, with the consensus and previous rate both at 3.75%. The next BoE rate decision is scheduled for July 30, 2026, at 11:00 [1].
From a technical perspective, GBP/USD is trading near the 20-day Exponential Moving Average (EMA) at 1.3370, indicating a neutral short-term outlook. The formation of a Volatility Contraction Pattern (VCP) and a Relative Strength Index (RSI) near 47.00 further reflect a lack of strong momentum in either direction. Key resistance levels are identified at 1.3467 and 1.3558, while support is seen at 1.3300 and 1.3140, with a breakdown below 1.3140 potentially exposing the pair to the psychological level of 1.3000 [1].
The BoE's stance on interest rates remains a critical factor for GBP. A hawkish tone or rate hike is typically bullish for GBP, while a dovish stance or rate cut is seen as bearish. However, both the Fed and BoE are expected to maintain current rates in the upcoming meetings [1].
CONCLUSION
The GBP/USD pair has gained modestly amid easing geopolitical tensions and ahead of key central bank policy decisions. With both the Fed and BoE expected to keep rates unchanged, the market is likely to remain in a wait-and-see mode, with technical indicators suggesting a neutral outlook in the near term.