GBP/USD finished Tuesday near 1.3545 after a narrow session, with resistance around 1.3550. It has stayed in a roughly 60-pip range over the past two sessions, with frequent intraday reversals.
The UK calendar is quiet until the weekend, so near-term direction is tied mainly to US Dollar moves. The Iran conflict and the closure of the Strait of Hormuz have supported crude prices, with no set ceasefire timeline.
Near Term Us Drivers
Fragile risk sentiment has tended to favour the US Dollar in recent periods. The key US release is Friday’s Non-Farm Payrolls, with consensus at 60K versus 178K previously.
A weaker NFP could lift GBP/USD, while a stronger result could support the US Dollar further. On Tuesday, ISM Services PMI printed 53.6, while JOLTS job openings rose to 6.87M.
On the 15-minute chart, price is near 1.3544, above the day’s open at 1.3533. Stochastic RSI is near 2, while a break below 1.3533 would point to more intraday downside.
On the daily chart, GBP/USD is above the 50-day EMA at 1.3459 and the 200-day EMA at 1.3391. Stochastic RSI is near 47, with support at 1.3459 and then 1.3391.
Turning Point Into 2026
We remember this time in 2025 when GBP/USD was stalled around 1.3550, driven almost entirely by US dollar strength and geopolitical tensions. The market lacked conviction, trading in a tight range while waiting for US data. Here in May 2026, the situation has reversed, with UK fundamentals now providing a clear direction.
The primary driver now is the divergence between central banks, a theme that has gained momentum all year. The Bank of England is signaling a hawkish stance after the latest UK CPI print for April 2026 came in at a stubborn 2.9%, well above target. This contrasts sharply with the quiet UK calendar we saw in 2025.
On the other side, the US Federal Reserve is showing signs of softening as inflation cools. The most recent Core PCE Price Index in the US fell to 2.6% year-over-year, and last week’s Non-Farm Payrolls added a modest 165,000 jobs. This is a far cry from the environment last year when a strong labor market supported the dollar.
For derivative traders, this growing policy divergence suggests buying call options on GBP/USD is the straightforward play, targeting a move toward 1.4000. Implied volatility has been creeping up from the lows seen earlier this year, suggesting the market is anticipating a bigger move. The constructive trend we saw forming above the 50 and 200-day moving averages in 2025 has now fully matured into a strong bull market.
A more nuanced strategy would be to sell put spreads to capitalize on the rising volatility and the firm support level that has formed around 1.3750. This approach allows us to collect premium while maintaining a bullish bias, with risk defined if US data suddenly strengthens. The main event to watch will be upcoming speeches from central bank officials for any shift in tone.
