10.04.202601:01 Forex Analysis & Reviews: GBP/USD: Price Analysis and Forecast. Fragile Ceasefire Between the U.S. and Iran Keeps Geopolitical Risks in Focus

The GBP/USD pair surpassed the 1.3400 mark on Thursday amid geopolitical developments. The ceasefire in the Middle East remains unstable, with Israel retaliating against Lebanon, continuing its confrontation with Hezbollah.

The pound is demonstrating growth amid ongoing geopolitical tensions and confidence in the Federal Reserve's future forecasts.

Geopolitical uncertainty continues to shape market sentiment: Iran has shown no willingness to open the Strait of Hormuz, insisting that Lebanon be included in the ceasefire conditions. Israel, in turn, is ramping up attacks that have resulted in over 250 casualties, raising concerns about further escalation of the conflict in the region.

U.S. inflation data came in above expectations: in February, consumer prices increased by 0.4% from the previous month, up from 0.3% the month before. The annual personal consumption expenditure (PCE) index rose by 2.8%, maintaining January levels. The core inflation gauge, which the Federal Reserve focuses on, also rose 0.4% month over month, matching forecasts, while the annual rate slowed from 3.1% to 3%, as anticipated.

Market expectations for Fed policy easing remain stable: CME FedWatch futures data indicate a possible rate cut of about 6 basis points by the end of the year.

The labor market demonstrates resilience despite a slight increase in jobless claims — from 203,000 to 219,000 for the week ending April 4 — which exceeded forecasts of 210,000. The four-week average reached 209,500; however, the number of continuing claims decreased by 38,000 to 1,794,000, marking a low not seen since May 2024.

The pound received support from expectations of an interest rate hike by the Bank of England. Despite ongoing economic tensions, the British currency is strengthening amid improved market sentiment and investor confidence in further monetary policy tightening.

According to Prime Market Terminal (PMT) data, market participants are pricing in a likelihood of a rate increase by the Bank of England at the June 18 meeting, while the chance of a change on April 30 is assessed at only 21%. Overall for the year, investors anticipate around 39 basis points of monetary policy tightening.

The table below shows the dynamics of the British pound's exchange rate against major currencies this week, with the most significant strengthening against the U.S. dollar.

From a technical perspective, the nearest resistance is at the level of the three simple moving averages around 1.3439. The next resistance will be at 1.3485. Support below the round number could be at 1.3380; if the price fails to hold there, the 20-day SMA will play this role. Oscillators are mixed, with the relative strength index remaining positive, supporting the bulls.