The slow pace of demand for the US dollar in light of the geopolitical tensions in the Middle East region allowed bulls to launch into the GBP/USD. 

• The slow pace of demand for buying the US dollar as a safe haven in light of the geopolitical tensions in the oil-rich Middle East region allowed bulls to launch into the GBP/USD pair with gains that reached the 1.2337 resistance level before settling around the 1.2320 level at the time of writing the analysis.
• Today, attention is focused on the statements of the Governor of the Bank of England, and most importantly, the US inflation numbers, which will have a strong reaction to the future of the US Federal Reserve’s policy.

The US dollar continued to decline against most other major currencies, with several US Federal Reserve officials sounding dovish hints this week, suggesting that they may not need to tighten monetary policy as much as initially thought. The only currency that failed to achieve gains against the dollar was the Japanese yen.

After statements made by Federal Reserve Vice Chairman Philip Jefferson and Dallas Fed President Lori Logan on Monday that tightening financial conditions due to the rise in Treasury yields may negate the need for additional increases. For his part, Atlanta Federal Reserve Bank President Rafael Bostic and Minneapolis Fed President Neal Kashkari made similar comments.

However, Kashkari, who has been an outspoken hawk during this tightening cycle, added that if long-term yields are higher because of expectations about what the Fed might do, they may need to meet those expectations in order to keep yields at those levels. . The decline in both the US dollar and yields in the wake of the Fed's recent comments suggests that the market may be fundamentally driven by such expectations, so calling with certainty for an end to this tightening campaign and a trend reversal in the dollar may be premature.

Currently, investors are assigning a roughly 30% chance of another US rate hike by December, but this could change if upcoming data indicates inflation is more stable than previously thought.

GBP/USD Technical Outlook

GBP/USD remains a few levels above the 100 hourly moving average line despite the pullback. Yesterday's decline prevented the currency pair from rising to the overbought levels of the Relative Strength Index over a 14-hour period. In the near term, and according to the performance on the hourly chart, it appears that the GBP/USD pair is trading within an ascending channel formation. This indicates a significant short-term upward bias in market sentiment. Therefore, the bulls will look to extend the current winning streak towards 1.2320 or higher to 1.2355. On the other hand, the bears will look to pounce on pullbacks at around 1.2271 or lower at the 1.2246 support.

In the long term, and according to the performance on the daily chart, it appears that the GBP/USD pair is trading within a sharp upward channel. This indicates a strong long-term bullish bias in market sentiment. Therefore, bulls will target long-term profits at around 1.2411 or higher at 1.2520. On the other hand, the bears - the bears - will be looking to pounce on profits at around 1.2175 or lower at 1.2059.

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