GBP/USD H4 Analysis GBP/USD Pauses Near Multi-Week Highs as Geopolitical Risks Revive Dollar Demand Sterling’s recent recovery lost momentum on Tuesday as a renewed wave of geopolitical uncertainty helped the US Dollar regain strength, pulling GBP/USD slightly lower after the pair briefly climbed above the 1.3500 psychological barrier. The retreat remains relatively modest so far, but it reflects how fragile bullish sentiment still is beneath the surface, particularly as traders continue balancing improving technical conditions against a macro backdrop dominated by Middle East tensions and shifting Federal Reserve expectations. The latest pressure on the pair emerged after reports confirmed that US forces carried out self-defense strikes in southern Iran late Monday, reviving fears that diplomatic progress between Washington and Tehran could quickly unravel. Markets had recently embraced hopes for a gradual de-escalation in the region, which weakened safe-haven demand for the Dollar and supported risk-sensitive currencies, including Sterling. However, the renewed military headlines reminded investors that the geopolitical situation remains highly unstable, encouraging a fresh defensive rotation back into the Greenback. At the same time, inflation concerns continue reinforcing expectations that the Federal Reserve may keep policy tighter for longer. Elevated Oil prices remain central to this narrative. Although crude prices have eased slightly from recent peaks, they are still trading at historically elevated levels relative to pre-conflict conditions, keeping broader inflation risks alive across global markets. Traders remain increasingly cautious about assuming that US price pressures will cool quickly enough to allow the Fed to pivot toward a more accommodative stance. That backdrop continues supporting Treasury yields and preserving the Dollar’s broader structural advantage. Despite Tuesday’s pullback, the technical structure for GBP/USD still leans modestly constructive in the near term. The pair remains above the 200-period EMA on the four-hour chart, while price action continues holding over the key 50% Fibonacci retracement level near 1.3476. This suggests that buyers still retain underlying control of the short-term trend, even if upside momentum has slowed following the latest geopolitical headlines. Importantly, the recent rebound has not yet been invalidated, with dip-buying interest still visible around intraday support zones. Momentum indicators continue supporting that cautiously bullish outlook. The RSI remains near 61, indicating positive momentum without entering overstretched territory, while the MACD stays comfortably in positive territory, reflecting that bullish pressure has weakened slightly but not reversed decisively. This combination often signals consolidation rather than a complete shift in direction, especially after a strong multi-session recovery move. From a price structure perspective, resistance near 1.3517 remains the immediate obstacle for bulls. A sustained break above that Fibonacci barrier could expose the next upside targets around 1.3575 and eventually the recent swing high near 1.3649. However, the pair may struggle to generate enough momentum for a clean breakout unless geopolitical tensions ease more convincingly or US economic data begins softening enough to undermine the Dollar’s yield advantage. On the downside, support around 1.3475, and the nearby 200-period EMA near 1.3460, remain crucial for preserving the current bullish recovery structure. A deeper corrective move below those levels would likely shift attention toward 1.3435, while a more aggressive selloff could expose the lower Fibonacci support zones around 1.3384 and 1.3303. Those areas would likely become critical battlegrounds if safe-haven flows into the Dollar intensify again. GBP/USD appears trapped between resilient technical support and an increasingly uncertain macro backdrop. Sterling has shown impressive stability despite persistent geopolitical turbulence, but traders remain hesitant to extend bullish positioning aggressively while the Middle East conflict continues threatening global inflation dynamics and reinforcing hawkish Federal Reserve expectations. Until markets receive clearer signals either from diplomacy or central bank policy, price action is likely to remain reactive, volatile, and heavily driven by shifting sentiment around risk appetite and the US Dollar.
