Pound Slips Below 1.3550 as Safe-Haven Demand Boosts US Dollar Amid Middle East Escalation

The British Pound (GBP) lost ground against the US Dollar (USD) on Tuesday, slipping below the 1.3550 mark as renewed geopolitical tensions supported the greenback. The GBP/USD pair remains under short-term pressure, with technical signals pointing toward a cautious, risk-off environment in global markets.

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🌍 Middle East Tensions Reinforce USD Strength

After a brief rebound on Monday, risk sentiment soured again early Tuesday as conflict between Iran and Israel escalated. Reports suggest Iran launched a new wave of powerful missiles, with additional drone strikes anticipated in the coming hours.

This wave of conflict has sparked safe-haven flows into the US Dollar, weighing on GBP/USD despite prior hopes for de-escalation. Unless market optimism returns in force, the USD may continue to hold the upper hand across major currency pairs.

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📊 US Retail Data, Fed Meeting to Drive Volatility

Traders are now watching closely as the US releases key Retail Sales and Industrial Production data for May. Any significant downside surprise in retail activity could weaken the USD temporarily.

However, the real focus lies on the Federal Reserve’s monetary policy announcement and updated economic projections, due later Wednesday. If policymakers take a hawkish tone or hint at delayed rate cuts, the USD could see renewed demand.

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🇬🇧 All Eyes on UK Inflation and BoE Policy Decision

The UK Consumer Price Index (CPI) for May, due Wednesday morning, will be another crucial driver for GBP/USD. Inflation data will help shape expectations for the Bank of England’s interest rate decision on Thursday, where the BoE is widely expected to hold rates steady at 4.25%.

If inflation prints hotter than expected, it could boost the Pound by raising the chances of further tightening later in the year.

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📉 GBP/USD Technical Overview: Bearish Pressure Builds

On the 4-hour chart, GBP/USD shows a clear loss of momentum:

• RSI is hovering just below 50, signaling neutral-to-bearish sentiment
• Price remains under the 20-period and 50-period SMAs, hinting at downside pressure
• Support is seen at:
  🔻 1.3530 (100-period SMA)
  🔻 1.3500 (round figure, static support)
  🔻 1.3430 (200-period SMA)

To the upside, key resistance levels include:
🔺 1.3570 (20-period SMA)
🔺 1.3600 (previous support, now resistance)
🔺 1.3630 (mid-channel zone)

A daily close below 1.3500 could open the door for deeper correction, while a sustained move above 1.3570 is needed to revive bullish sentiment.

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🧠 Trading Summary for DailyForex.pk Readers

• Geopolitical conflict is driving safe-haven demand for USD
• Fed policy outlook and US retail data could determine USD trend strength
• UK CPI will shape BoE expectations ahead of Thursday’s rate announcement
• GBP/USD short-term bias leans bearish unless risk sentiment improves

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