25 June 2025,03:48
Daily Market Analysis
25 June 2025, 03:48
Key Takeaways:
*GBP rebounds near recent highs amid improving risk sentiment
*BOE signals no imminent rate cuts, citing persistent inflation concerns
*Carry trade flows favor GBP as dollar weakens on rate cut bets
Market Summary:
TThe British Pound held firm and rebounded toward recent highs as easing geopolitical tensions and a hawkish tilt from the Bank of England (BOE) combined to support sentiment. Investors are currently focusing on two key catalysts impacting the UK currency: the tentative Middle East ceasefire and the BOE’s monetary stance.
Sterling found renewed demand following U.S. President Donald Trump’s weekend announcement that Israel and Iran had agreed to a ceasefire. The move improved global risk appetite and drove capital away from safe-haven assets such as the U.S. dollar and Swiss franc, into higher-risk currencies like the pound. However, traders remain cautious due to the absence of formal confirmation from Tehran, and sporadic reports of continued hostilities in parts of Iran, keeping geopolitical risks alive.
On the monetary policy front, the BOE has struck a cautious yet hawkish tone. The central bank reiterated that near-term rate cuts are not under immediate consideration, citing elevated inflation risks. Concerns over volatile energy prices stemming from the Middle East, along with potential trade friction globally, have prompted policymakers to remain vigilant. Supply-side shocks remain a key inflationary concern, and BOE officials signaled the need to observe further data before altering their policy trajectory.
In the near term, Sterling is likely to trade in a narrow range, with the next major directional catalyst likely to come from key UK data releases. Until then, the Pound remains in a holding pattern, anchored by BoE caution and shaped by broader global sentiment.
GBP/USD continues its bullish push, extending gains after reclaiming the 1.3400 handle. The pair is now hovering just below the 38.2% Fibonacci retracement level near 1.3640, following a strong rebound off the June low at 1.3476. Price is testing the upper range of its recent consolidation zone, but signs of exhaustion are emerging as it approaches a key resistance band between 1.3640 and 1.3690. This region is likely to determine whether the current rally is a short-term corrective move or the beginning of a broader breakout.
Momentum indicators suggest fading bullish strength. The RSI has climbed to 68, approaching overbought territory, which may signal a short-term pause or pullback if upward momentum fails to accelerate. Meanwhile, the MACD remains in positive territory, with the MACD line staying above the signal line. However, the histogram shows signs of plateauing, suggesting that bullish momentum may be losing steam.
Should GBP/USD break decisively above the 1.3640–1.3690 zone, the next upside target would be the 61.8% Fibonacci retracement at 1.3742. However, failure to breach this resistance could invite consolidation or a pullback toward initial support at 1.3577 (23.6% Fib) and 1.3510. A break below 1.3510 would shift near-term bias back to neutral, exposing further downside toward the 1.3475 and 1.3420 levels.
Resistance Levels: 1.3640, 1.3690
Support Levels: 1.3577, 1.3510
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