GBP/USD Surges Above 1.36 Amid Escalating Israel-Iran Conflict, Weakening Dollar Due to Risk Sentiment Shift

• GBP/USD Climbs 0.27% to 1.3600 Amid Rising Middle East Tensions
• Escalating Israel-Iran Hostilities Impact Global Markets
• US Dollar Index (DXY) Dips as Treasury Yields Ease Despite Geopolitical Tensions

The GBP/USD experienced a significant uptick during the North American trading session, ascending past the 1.36 mark as tensions between Israel and Iran intensified. Currently, the pair is trading at 1.3600, marking a 0.27% increase.

GBP Strengthens as USD’s Safe-Haven Appeal Wanes; Market Eyes Upcoming Central Bank Decisions

Last Friday saw the GBP/USD pair decline to 1.3515 due to a surge in risk aversion, triggered by Israel’s military and nuclear strikes against Iran. The conflict has seen continuous exchanges of hostilities, dampening hopes for an imminent ceasefire.

The US Dollar started the week weaker, as evidenced by the US Dollar Index (DXY), which fell 0.27% to 97.88.

Monday’s economic calendar is relatively light, with the focus on the New York Fed Manufacturing Index, which showed a decline for the sixth consecutive month to -16.0. Attention is now turning to the upcoming US Retail Sales data and the Federal Reserve’s policy meeting scheduled for June 17-18, culminating with Fed Chair Jerome Powell’s address.

In the UK, market participants are closely monitoring the upcoming release of Consumer Price Index (CPI) data, the Bank of England’s policy decision, and Retail Sales figures.

Key Central Bank Meetings to Watch

The Federal Reserve is anticipated to maintain interest rates at 4.25%-4.50%, but traders are keenly awaiting the latest economic projections. In the UK, there is an 84.21% likelihood that the Bank of England will hold rates steady at 4.25%, with expectations of a potential 25-basis-point cut by September.

GBP/USD Technical Analysis: Bullish Outlook

From a technical perspective, the GBP/USD is showing an upward trend after rebounding from the 20-day Simple Moving Average (SMA) at 1.3541, pushing the pair back above the 1.36 level. The Relative Strength Index (RSI) suggests that the bullish momentum is intact, although resistance might be encountered if the RSI fails to reach new highs.

Potential resistance levels for GBP/USD include the year-to-date high at 1.3631, followed by 1.3650 and the 1.37 level. Conversely, support can be found at the 20-day SMA at 1.3540, the June 13 low of 1.3515, and the 1.35 level.