The GBP/USD currency pair is expected to trade between 1.3430 and 1.3490 shortly. Over a longer period, analysts from UOB Group suggest a wider range of 1.3400 to 1.3535. Recently, the GBP fluctuated between 1.3435 and 1.3502, closing lower at 1.3462, with no notable momentum change. Since peaking at 1.3533 late last month, the currency pair has shown stable trading but has pulled back from that high. Current momentum readings are mostly unchanged, hinting at continued range-bound trading. This outlook takes into account various market factors, including geopolitical events affecting safe-haven flows.

Geopolitical Influences On Currencies

Market dynamics are sensitive due to geopolitical tensions, like issues between the US and Venezuela, which are impacting the Dollar’s strength. The CAD is weakening under similar pressures, while comments from the Bank of Japan are strengthening the Yen. Traders are closely monitoring the US ISM Manufacturing PMI report for further insights. In the broader financial market, cryptocurrencies and commodities like gold are also influenced by geopolitical tensions, shaping trader sentiment and capital flows. These conditions emphasize the need for cautious trading strategies amid current economic uncertainties. Looking ahead, GBP/USD is expected to move sideways, likely stuck between 1.3400 and 1.3535. With flat momentum indicators, selling volatility within this range could be a smart move. Options strategies, such as iron condors around the 1.3470 mark, may be effective here. This perspective is backed by the implied volatility of the pair, which has been declining since the fourth quarter of 2025 and recently reached 6-month lows. Last year, UK inflation proved stickier than in the US, supporting the pound, while the dollar benefits from safe-haven demand due to the Venezuela situation. This fundamental tug-of-war suggests the pair will remain range-bound for now.

Preparing For Potential Breakouts

We should stay alert for potential breakouts from external shocks. The main risk is an increase in US military action, which could boost the dollar and break through the 1.3400 support level decisively. We have seen similar patterns during geopolitical tensions in 2024, where safe-haven currencies surged rapidly. Key events on the horizon include the upcoming US ISM Manufacturing PMI data and the Supreme Court’s ruling regarding President Trump’s tariff powers. A significantly weaker PMI could weaken the dollar, while the court ruling could create significant political uncertainty. Traders should be ready to close volatility positions and react if either the 1.3400 support or 1.3535 resistance is breached. Create your live VT Markets account and start trading now.

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