GBPUSD stick to modest gains despite a weak US dollar

The GBP/USD pair remained largely unchanged during the European session on Thursday, as traders and investors took a cautious stance due to uncertainty surrounding the UK general election and the potential agreement between the US and Iran. This currency pair is currently affected by both external geopolitical tensions and unpredictable domestic political factors.

Earlier in the week, GBP/USD began on a weaker note, but demand re-emerged near the 1.3500 level, buoyed by renewed optimism over US-Iran negotiations and improved risk sentiment. After reaching a fresh weekly high of 1.3640, the pair experienced a modest pullback below 1.3600 as markets digested the latest updates on US-Iran talks. Attention is also shifting to the UK’s local elections, with polls indicating a potential setback for Prime Minister Keir Starmer’s Labour Party. Voting is underway across England, Scotland, and Wales on Thursday.

UK Construction Activity Declines

GBP/USD came under additional pressure following the release of a disappointing UK construction PMI report. The sector saw its sharpest slowdown since November, with April’s construction purchasing managers’ index (PMI) falling to 39.7 from 45.6 in March, reflecting a significant decline in business activity. The slowdown was attributed to ongoing geopolitical instability and rising operational costs.

GBPUSD Technical Outlook

Following two consecutive sessions of gains, GBP/USD is trading around 1.3620. The daily chart shows the RSI indicator at 60, suggesting that buying momentum remains stronger than selling pressure. The pair appears to be consolidating its recent gains, with bulls maintaining control. The medium-term technical outlook remains supportive, and further upside is possible if momentum persists.

Moving forward, key resistance is seen at 1.3660 (last week’s high); a break above this level could open the door to further gains toward 1.3720/1.3740. On the downside, initial support is located at 1.3570, with further significant levels at 1.3500 and 1.3460 if the pair breaks lower.

 

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