Pound Slips as Geopolitics Lift Dollar Ahead of PCE Data

Key Moments

Geopolitics Pressure Sterling as Dollar Demand Rises

The GBP/USD pair is trading about 0.2% lower around 1.3400 in European hours on Thursday, as renewed geopolitical concerns weigh on risk sentiment and support the US Dollar.

The move comes amid fears that conflict in the Middle East could escalate again after an exchange of attacks between the United States and Iran. These developments have driven investors toward the Greenback, dampening appetite for the British Pound.

During the session, Iran’s Islamic Revolutionary Guard Corps (IRGC) asserted its authority in the Strait of Hormuz, declaring that Tehran is overseeing and managing traffic through the key waterway. The IRGC warned that any interference would face a “decisive response” and indicated that vessels must secure authorization and coordinate with the Navy before transiting Hormuz.

This stance contrasts with demands from US President Donald Trump, who has called for a lasting peace arrangement that would include reopening Hormuz and transferring uranium enrichment activities to the United States.

Against this backdrop, the safe-haven appeal of the US Dollar has strengthened. The US Dollar Index (DXY), which measures the currency against a basket of six major peers, is trading higher around 99.30 as of the latest reading.

Focus Turns to US PCE Inflation Data

Market participants are now awaiting the upcoming release of the US Personal Consumption Expenditure Price Index (PCE) for April, scheduled for 12:30 GMT. The data are expected to provide further direction for the Dollar and risk assets, including GBP/USD.

The Personal Consumption Expenditures (PCE) Price Index, published each month by the US Bureau of Economic Analysis, tracks changes in prices for goods and services purchased by US consumers. The year-on-year figure compares the price level in the reference month with the corresponding month a year earlier.

The PCE framework can incorporate the way consumers substitute between goods when prices change, and the associated PCE Deflator is regarded as the Federal Reserve’s preferred gauge of inflation. In general, higher-than-expected readings tend to be supportive for the US Dollar, while weaker outcomes are typically negative for the currency.

GBP/USD Technical Picture: Bearish Tone Persists Below 20-Day EMA

On the technical front, GBP/USD is trading near 1.3400 and retains a short-term bearish bias. The pair remains below the 20-day Exponential Moving Average (EMA) at 1.3461 and is moving within a broader downward pattern defined by a resistance line that extends from 1.3871 through 1.3593. Within this structure, the overall configuration is described as sideways, constrained by a Symmetrical Triangle formation.

Momentum signals are mixed. The Relative Strength Index (RSI) is fluctuating between 40.00 and 60.00, highlighting the current lack of conviction among market participants.

On the upside, the first area of resistance is located around the 20-day EMA near 1.3461. Above that, the descending trend-line region close to 1.3593 is seen as the next significant cap for further gains.

On the downside, initial support lies near the broken uptrend reference at 1.3333. Should bearish pressure increase, a more substantial support zone is aligned with the prior trend-line origin around 1.3162.