The British pound edged marginally higher on Monday but remained pinned near a two-week low against the US dollar, as a fresh wave of US-Iran hostilities dampened the greenback's earlier pullback and fueled risk-off sentiment across markets. The escalation came after reports emerged that the United States had launched its first military operation against Iran in roughly a month, targeting missile launchers on Larak Island. The Islamic Revolutionary Guard Corps was allegedly preparing to fire rockets to lay mines in the Strait of Hormuz, a key chokepoint for global oil shipments. Tehran swiftly retaliated by attacking US military installations in Jordan, with the IRGC vowing to "respond and punish" America for the strike. That development has reignited geopolitical tensions in the region, driving safe-haven flows into the dollar and weighing on sterling. At the same time, markets continued to digest Federal Reserve Chairman Kevin Warsh's hawkish remarks at the Jackson Hole symposium, which reinforced expectations that the central bank may raise rates again in September if inflationary pressures remain elevated. Warsh emphasized that inflation remains too high and continues to be the Fed's top concern, reaffirming the central bank's commitment to its 2% PCE inflation target. Foreign exchange strategists at OCBC noted that concerns about currency devaluation have subsided following Warsh's comments, with the dollar strengthening, gold falling, and the US yield curve flattening. The bank argued that the current pullback in the dollar may be limited, and that dollar shorts may require weaker US data to rebuild confidence. As markets reassess the short-term policy path in light of Warsh's remarks and evolving data, the focus now shifts to upcoming US labor and inflation figures, as well as the September FOMC meeting. On the UK side, the economic calendar is lighter on Monday, with attention turning to the G20 finance ministers' meeting in North Carolina, where US Treasury Secretary Scott Bessent is working to persuade major economies, particularly China, to cut ties with Iran while also trying to ease concerns about rising US government debt and bond yields.
GBP/USD is currently trading near 1.3540, having stabilized after last week's decline but still trading below key short-term moving averages. The pair's inability to reclaim these levels suggests that sellers remain in control, though the broader uptrend has not yet been broken. On the hourly chart, the 50-period moving average sits at 1.3570, while the 200-period moving average is positioned at 1.3610. Price is trading below both averages, indicating that near-term momentum has shifted in favor of sellers. The fact that price has slipped beneath these levels suggests that buyers have lost the upper hand in the immediate timeframe, and any recovery attempt would need to reclaim these averages to regain bullish traction. The 50-period average is now acting as immediate overhead resistance, while the 200-period average provides a more distant ceiling. Stepping back to the four-hour chart, the 50-period moving average resides at 1.3610, while the 200-period moving average rests lower at 1.3485. Price is currently trading between the two averages, below the 50-period but above the 200-period, a configuration that signals a short-term corrective phase within a broader uptrend. The 50-period average is acting as overhead resistance, while the 200-period average provides a safety net just beneath current levels. Immediate resistance is spotted at 1.3565, marking the session's peak and a level that has repeatedly capped upside attempts. Above that, the next supply band stretches from 1.3585 to 1.3600, followed by a heavier barrier at 1.3620. If buyers manage to push through these levels, the market could advance toward 1.3645 and 1.3670. On the downside, the first support floor sits at 1.3520, a level that has provided a cushion during recent pullbacks. Losing that footing would open the door to 1.3500, then 1.3485, which aligns with the four-hour 200-period moving average and represents a key support zone. Further down, 1.3465 and 1.3440 represent deeper demand pockets. Looking ahead, if GBP/USD can hold above 1.3520 and reclaim the hourly moving averages, buyers may stage a recovery attempt toward 1.3565 and beyond. However, if selling pressure intensifies and price breaks below 1.3520, a deeper correction toward 1.3500 and 1.3485 becomes increasingly likely.
