Sterling edged up about 0.14% on Monday, with GBP/USD holding near 1.3250–1.3260 after US–Iran talks in Switzerland were described as laying a “good foundation”. Risk appetite improved, although Iran floated closing the Strait of Hormuz in response to Israel’s attacks on Lebanon, drawing a warning from President Donald Trump that the US would strike Tehran if the threat were carried out. In the UK, Prime Minister Keir Starmer resigned and opened nominations for his successor on 9 July, yet the currency stayed firm; Andy Burnham, recently sworn in as an MP, emerged as the expected replacement, and his team said he would follow Chancellor Rachel Reeves’ fiscal rules.
Attention now shifts to upcoming US data including Flash PMIs, the final reading of Q1 2026 GDP and the Core PCE Price Index, while the UK calendar is dominated by politics and speeches from Bank of England officials. On charts, GBP/USD remains under pressure below clustered SMA resistance around 1.3459 after a break near 1.3441, with RSI near 38. Resistance is also tied to a downtrend from 1.3869, while support sits around 1.3159 and recent lows just above 1.3200.
Volatility Drivers And Political Risks
Based on the current situation as of June 22, 2026, we anticipate heightened volatility in the GBP/USD pair. The positive sentiment from US-Iran talks is being directly countered by the risk of conflict over the Strait of Hormuz, which historically causes oil prices to spike. We believe this uncertainty makes derivative strategies that profit from price swings, such as buying straddles, more attractive than placing simple directional bets.
The political situation in the UK presents a clear downside risk for the Pound. We remember the market chaos of September 2022, when concerns over fiscal policy sent UK 10-year Gilt yields soaring above 4.5% and severely weakened Sterling. While Andy Burnham’s team has offered reassurance, any policy announcements that suggest a deviation from current fiscal rules could trigger a similar negative reaction from markets.
Key Data Events And Technical Outlook
In the United States, the upcoming Core PCE inflation data is the most critical event on the calendar. A higher-than-expected inflation number will almost certainly strengthen the US Dollar as it would increase pressure on the Federal Reserve to maintain a hawkish stance. Given that even small deviations from consensus can move currency markets, we are preparing for a potential sharp drop in GBP/USD if US inflation proves to be sticky.
The technical outlook for GBP/USD remains bearish, with the pair trading below key resistance around 1.3459. We see this level as a strong ceiling, making it an opportune area to consider selling call options or initiating short positions on any temporary rallies. The weak Relative Strength Index reading below 40 reinforces our view that sellers are currently in control.
Our focus on the downside is the support zone just above 1.3200. A clean break of this level would confirm the bearish trend and likely accelerate selling pressure. Therefore, we would view a move below this price as a trigger to either buy put options or add to existing short positions for a targeted move toward the 1.3150 area.
