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GBP/USD rises as UK leadership transition and Middle East risk in focus
GBP/USD climbed to 1.3403 as investors weighed the UK prime minister change on 20 July and rate-hike expectations, while Middle East tensions pushed oil higher and increased inflation risk.
GBP/USD rose to 1.3403 on Wednesday as investors focused on a major UK political transition, with Andy Burnham set to take office on 20 July. The market is also watching the potential appointment of Ed Miliband as Chancellor of the Exchequer, with betting markets viewing him as a candidate associated with more active fiscal spending.
Action Forex said the move is happening alongside heightened geopolitical risk in the Middle East, including renewed US strikes on Iran. The outlet also pointed to an escalation involving Donald Trump’s restoration of a naval blockade on Iranian shipping and his proposal for a 20% fee related to securing the Strait of Hormuz, both of which have contributed to rising oil prices and inflation concerns.
Against this backdrop, markets have strengthened expectations for additional Bank of England rate hikes, with investors pricing in two increases in 2026, and a September hike already largely reflected in quotes. In the US, weaker-than-expected June inflation has eased pressure on the Federal Reserve, though Christopher Waller warned policy could tighten again if inflation stays above the 2% target.
On the charts, Action Forex highlighted that on the H4 timeframe the market is forming a consolidation range around 1.3393, with technical signals suggesting a potential move toward 1.3451 if there is an upside breakout. The outlet added that a downside breakout could shift the outlook toward 1.3333 and potentially extend further to 1.3090, based on its described MACD and Stochastic readings.
Latest closeGBP/USD 1.339 ▲0.0%