The GBP/USD exchange rate experienced a rebound on Friday following reports indicating that the Iranian Foreign Minister was traveling to Pakistan, potentially for discussions with the US. On Monday, it was positioned at 1.3530 as market participants anticipated the forthcoming interest rate decisions from the Bank of England and the Federal Reserve. The GBP/USD pair is set to attract attention as the likelihood of discussions between the US and Iran diminishes. Despite Donald Trump’s enthusiasm for the second round of talks, there has been a notable lack of engagement from the Iranians.
Consequently, crude oil prices could potentially continue their upward trajectory due to the closure of the Strait of Hormuz by Iran and the US. The Strait of Hormuz represents a significant 20% of global crude oil shipments, and there is a possibility that Iran could close the Red Sea if the conflict persists. The GBP/USD pair is poised to respond to the forthcoming US macroeconomic data, which encompasses consumer confidence, the first quarter GDP report, housing starts, and building permits. The forthcoming figures will shed light on the current condition of the US economy, particularly in the context of the ongoing conflict.
The Federal Reserve and the Bank of England are set to announce their interest rate decisions this year, which is of significant importance. Analysts anticipate that the Federal Reserve will maintain interest rates at a steady range of 3.50% to 3.75%. The pair is expected to respond to the forthcoming BoE interest rate remaining unchanged, given that inflation is holding steady. A report released last week indicated that the economy expanded by 3.3% in March, driven by the ongoing increase in crude oil and gas prices. Experts anticipate that inflation will hold steady for the rest of the year. The daily timeframe chart indicates that the GBP/USD pair has experienced a rebound over the past few weeks, rising from a low of 1.3162 in March this year to its current level of 1.3530.
The asset has surpassed the critical support level at 1.3475, marking its peak on March 10 and 23. It has also consistently stayed above the 50-day Exponential Moving Average. On the positive side, the pair has formed an inverted head-and-shoulders pattern, a widely recognized bullish reversal indicator in technical analysis. The asset has surpassed the Supertrend indicator. Consequently, the pair is expected to maintain its upward trajectory as buyers aim for this month’s peak of 1.3600. A breach above that target will indicate potential for further gains in the short term. A decline beneath the support level of 1.3500 will negate the optimistic perspective.