GBP/USD is seeking direction around 1.3450 in a market characterised by caution. Rising tensions between the US and Iran are impacting risk appetite on Monday. The pair is exhibiting a triangular formation, with a bearish outcome appearing more likely. The British Pound remains practically flat against the US Dollar on Monday, trading both sides of the 1.3450 level, with investors wary of taking excessive risks. Increasing tensions in the Middle East are impacting risk appetite, while the rally of the USD remains muted, in anticipation of a series of significant fundamental releases in the United States.
A further escalation of tensions between the US and Iran, alongside the extension of Israel’s occupation in Lebanon, has prompted retaliation pledges from Iranian authorities, casting shadows over an already fragile ceasefire. US President Donald Trump is still expected to sign a memorandum of understanding that would extend the ceasefire. Iran’s Tasnim news agency, referencing a source familiar with the negotiations, indicated that the framework of the agreement remains unconfirmed. In addition, market participants are poised for a series of significant economic indicators from the United States, commencing with the ISM Manufacturing PMI scheduled for release later on Monday, and culminating on Friday with the critical May Nonfarm Payrolls report.
These figures could assist in evaluating the forthcoming actions of a divided US Federal Reserve committee and, consequently, establish the near-term trajectory for USD crosses. GBP/USD trades at 1.3461, maintaining a constructive bullish bias as a series of lower highs and higher lows create a triangle pattern. Triangles are regarded as continuation patterns, and in this instance, a bearish outcome is preferred. Momentum indicators in 4-hour charts indicate a slight bullish pressure.
The Relative Strength Index is positioned just above the 50 midline, exhibiting a modest stance, while the Moving Average Convergence Divergence histogram has shifted to a slightly positive territory. On the topside, the triangle top is positioned around 1.3500, which, in conjunction with the May 13 high near 1.3540, is expected to pave the way towards May’s peak, just above 1.3650. On the downside, the triangle’s lower boundary is approximately 1.3400. Last week’s low, at 1.3365, along with the May 15 low in the vicinity of 1.3300, will be of particular interest.