GBP/USD eases below 1.3350 on Monday, following a seven-day rally. Recent tensions in the Strait of Hormuz have negatively impacted market sentiment during what was otherwise a tranquil beginning to the week. The pair continues to trade within a descending channel. The British Pound ticks lower against the US Dollar Monday, attempting to close a seven-day rally, as tensions rise again in the Strait of Hormuz, one of the critical points in the peace process between Washington and Tehran. The GBP/USD pair is currently trading around 1.3340, having declined from last week’s peak of 1.3387, yet it continues to uphold a near-term bullish trend.
The United Command of Iran’s Armed Forces has stated that any vessel deviating from the designated route to traverse the crucial waterway will jeopardise its security, and that any US interference in the Strait will be met with a decisive response. These threats follow Iran’s ambassador in China, Rahmani Fazli, reaffirming Tehran’s intention to impose fees on vessels traversing Hormuz during a conference in Beijing last weekend, a notion that has been clearly dismissed by the US. In the macroeconomic calendar, June’s S&P Global Construction Purchasing Managers’ Index stands out as the sole noteworthy event in the UK calendar.
In the United States, the ISM Services PMI report and remarks from Federal Reserve Governor Christopher Waller are expected to influence the trajectory of the US Dollar later today. GBP/USD is currently at 1.3340, maintaining a short-term positive outlook. However, the inability to surpass the 1.3385 level sustains the overarching bearish trend. Momentum indicators indicate a reduction in bullish pressure, as the Relative Strength approaches the 50 midline and the Moving Average Convergence Divergence line crosses beneath the Signal line, signalling a bearish trend.
Bulls have encountered a pause at the trendline resistance established from the late May highs, coinciding with the price levels near the June 12 and 16 lows, and just a few pips beneath the significant 200-day SMA, positioned around 1.3400. This resistance should yield to confirm a trend shift, paving the way towards the June 15 high, at 1.3460, along with the May 25 and 26 highs, just above the 1.3500 level. On the downside, Thursday’s low, at 1.3268, is expected to serve as support prior to the June 24 low, at 1.3140, and the lower boundary of the referenced channel, currently situated around 1.3110.