• GBP/USD recovered above 1.3300 on Tuesday as investors pared back bullish bets on the U.S. currency, driven by expectations that the Iran war could soon de-escalate..
• The dollar has strengthened due to safe-haven demand, with the U.S. better positioned on energy than import-reliant economies like Britain.
• Energy prices have eased slightly, although Brent crude futures still trade above $100 per barrel.
•Expectations for Bank of England rate hikes eased after Donald Trump signalled the war may end soon.
Interest rate futures now price in nearly two 25-bps hikes by the Bank of England by end-2026, down from over three in March. Before the Middle East war, markets had expected two rate cuts instead.
• Immediate resistance is located at 1.3358(38.2%fib), any close above will push the pair towards 1.3438(March 25th high)
• Strong support is seen at 1.3224(Daily low) and break below could take the pair towards 1.3144 (23.6%fib).
Recommendation: Good to sell around 1.3350 with stop loss of 1.3420 and target price of 1.3250.
