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The GBP/USD pair continues its decline, touching 1.3403 on Thursday, as the pound hovers near a four-week low.

Political uncertainty in the UK and heightened demand for safe-haven assets amid the Israel-Iran conflict have weighed heavily on the sterling.

Today, the Bank of England (BoE) holds its monetary policy meeting, and markets widely expect rates to be kept on hold. Focus will be on the BoE’s forward guidance, particularly amid rising oil prices.

Meanwhile, markets are still pricing in two rate cuts in 2025. Combined with soft UK macroeconomic data and the Federal Reserve’s hawkish stance, this has weighed on the pound’s yield and diminished its relative appeal to investors.

Over the past 24 hours, the broad-based strengthening of the US dollar has further pressured the GBP exchange rate.

Earlier, the pound reacted to inflation figures, which came in line with forecasts. Annual inflation eased to 3.4% in May (from 3.5% in April), while core inflation dipped to 3.5% (from 3.8%). However, the reading remains well above the BoE’s 2% target, indicating that progress is still too limited to prompt a change in the Bank's cautious stance on rate cuts.

Technical analysis of GBP/USD

H4 Chart:

(Click on image to enlarge)

• GBP/USD continues its downward trajectory, targeting 1.3360
• Once this level is reached, a correction towards 1.3496 may follow
• After the correction, another decline towards 1.3240 could materialise
• This scenario is supported by the MACD indicator, with its signal line below zero and pointing sharply downward

H1 Chart:

(Click on image to enlarge)

• The pair is forming the third wave of decline, targeting 1.3373
• A pullback towards 1.3494 is expected before a potential fifth wave lower to 1.3360
• The Stochastic oscillator supports this scenario, with its signal line below 50 and trending down towards 20
   

Conclusion

The GBP/USD remains under downward pressure, with key levels to watch at 1.3360 and 1.3240. A short-term correction may precede further declines, supported by technical indicators.

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