**Pound Sterling Rebounds as Market Eyes Fed Policy and Geopolitical Tensions**
The British pound has staged a notable recovery in recent days. On June 23, it briefly climbed to 1.3500 against the US dollar during North American trading hours, marking a daily gain of about 0.37%. This rebound has largely been driven by two key factors: dovish signals from the Federal Reserve and a rise in geopolitical tensions in the Middle East, both of which have shifted market sentiment and boosted risk appetite.
Comments from Fed policymakers have played a significant role in shaping market expectations. Fed Governor Michelle Bowman indicated support for beginning interest rate cuts as early as July. Coupled with recent economic data suggesting that inflationary pressures in the US are beginning to ease, the market is increasingly pricing in the likelihood of a more accommodative policy stance. As a result, the US dollar has softened, giving a lift to non-dollar currencies like the pound.
At the same time, escalating tensions in the Middle East have increased investor concerns over geopolitical risks. This has triggered shifts in capital flows, with some funds moving into major currencies such as the pound as a form of safe-haven allocation. This, too, has provided support for sterling’s upward momentum.
From a technical standpoint, GBP/USD has been consolidating between 1.34 and 1.36 in recent sessions. On June 12, it reached a yearly high of 1.3617. Short-term moving averages are currently aligned in a bullish formation. If the pair breaks through resistance at 1.3555, the next upside target could be 1.3645 or even higher. However, failure to clear resistance could see the pound retreat to the 1.3315 area in search of support.
Looking ahead, if the Fed proceeds with rate cuts as expected in July, the dollar could remain under pressure in the near term, providing further room for sterling strength. However, geopolitical uncertainty remains a significant wildcard, and traders should stay alert to developments on the international front.
In summary, the pound has shown resilience lately, buoyed by expectations of a Fed policy shift and safe-haven flows amid global tensions. That said, the outlook remains subject to change. Investors are advised to remain cautious, monitor global developments closely, and stay flexible in response to a rapidly shifting market landscape.
