GBP/USD closed the previous week nearly unchanged, ending on a negative note. However, during the European morning, the pair gained momentum, recovering towards 1.2950.
US Dollar weakness at the start of the week allowed GBP/USD to stabilise, aided by reduced concerns around aggressive US tariffs. During early European trading on Monday, GBP/USD attracted buyers around 1.2940 due to the softer Greenback.
Geopolitical Influence On Markets
Geopolitical factors continue to influence the market, with airstrikes in Yemen leading to tension between the US and Iran-backed militants. Despite these developments, GBP/USD holds at its highest level in four months after previously nearing 1.3000.
Essentially, what we saw last week was a period of hesitation, followed by a mild recovery that was largely driven by a weaker Greenback. Sterling managed to benefit from this, though not decisively enough to push beyond the key 1.3000 mark. Market participants stepped in early on Monday, sensing an opportunity near 1.2940, reinforcing the idea that demand exists at those levels.
Looking ahead, traders should remain attentive to how geopolitical events continue to develop, as they have been exerting a clear pull on sentiment. The situation surrounding Yemen remains a source of concern, as tensions with Iran-backed factions introduce additional unpredictability into global markets. While the pair has remained firm despite these external risks, any flare-up in hostilities could shift sentiment quickly.
Key Factors For Traders
For those trading derivatives tied to the pair, it would be wise to monitor economic developments on both sides of the Atlantic. The dollar’s weakness has played a defining role in the latest moves, but a shift in expectations around US tariffs or Federal Reserve policy could alter this dynamic. The reluctance to push decisively above 1.3000 suggests that buyers are active but cautious, possibly waiting for a more definitive reason to commit further. Keeping an eye on technical levels, particularly recent support and resistance areas, will be necessary in the coming sessions.
