British Pound climbs as Hormuz talks stall, US CPI in focus

The British Pound Sterling (GBP) experienced a rise of 0.2% during the North American trading session on Monday. This increase comes as markets process Middle Eastern developments and await U.S. Consumer Price Index (CPI) data. The GBP/USD pair reached a rate of 1.3520, following a bounce from daily lows of 1.3483. Ongoing talks between Oman and Iran have failed to provide a solution, which has contributed to rising oil prices.

West Texas Intermediate (WTI) saw a rise of more than 4.5% to $80.69 per barrel. The U.S. Dollar Index (DXY) increased by 0.1% to 99.73. Geopolitical tensions and their effect on energy prices continue to influence market sentiment, with investors closely monitoring the Strait of Hormuz reopening. However, economic data is limited, but more will be released on Tuesday.

UK economic reports will include the BRC Like-For-Like Retail Sales for July, which are predicted to fall from 1.7% to 1.5% year-over-year. On Thursday, traders will focus on the release of Gross Domestic Product (GDP) figures, which are expected to show a robust economy. In the U.S., the schedule will provide updates on inflation figures for consumers and producers, along with Initial Jobless Claims.

The lack of progress in Hormuz indicates that financial markets anticipate 22 basis points of tightening by the Federal Reserve (Fed) by the end of 2026, up from 17 basis points expected last Friday, according to Prime Terminal data. The Bank of England's (BoE) decisions on interest rates are influenced by energy price fluctuations due to the U.S.-Iran conflict, which keeps traders uncertain about whether to hold or raise rates by the end of the year.

Currently, traders expect a 25-basis-point rate hike from the BoE by year-end. In technical analysis, GBP/USD is currently at 1.3525, displaying a bullish bias while trading above a cluster of support levels. The Simple Moving Average (SMA) ranges around 1.3367 and acts as support alongside previous support and resistance levels.

The Relative Strength Index (RSI) around 62 suggests a bullish sentiment without indicating overbought conditions. Potential support levels are identified near 1.3514, 1.3432, and the SMA zone near 1.3367. Conversely, resistance levels include the higher upward trendline break around 1.3566 and a sustained close above this level, which could lead to further gains beyond the recent range.