Geopolitical tensions, domestic political turmoil and UK fiscal and inflation concerns are expected to keep sterling under pressure, as GBP/USD retests its recently bruised 100-DMA support near 1.3465.

The pound struggled in Tuesday’s session, caught in a broad global risk exit triggered by rising crude oil prices and the apparent stalling of Middle East peace negotiations. This flight to safety has left pro-cyclical currencies like the pound vulnerable to shifting sentiment. Compounding the external pressure is a brewing domestic political storm. Prime Minister Keir Starmer is facing intensified scrutiny over his decision to appoint Peter Mandelson as the UK’s ambassador to the U.S.

This political angst, coupled with rising UK gilt yields, has brought the country's fiscal fragilities back into sharp focus. With inflation remaining stubbornly persistent and economic growth continuing to be subpar, the pound is struggling to find a positive catalyst.

Technically, GBP/USD is currently navigating a bearish landscape, trading below psychological support at 1.35 near 1.3492. Immediate resistance is pegged at the 10-DMA by 1.3517 and the Ichimoku conversion line at 1.3523. A sustained move above these levels would be required to test the daily cloud top at 1.3544 and mount a run at the April 17 high at 1.3599.

On the downside, support is anchored at the 100-DMA of 1.3465, near today's low of 1.3463. A break below this floor could see the pair retreat toward the critical 200-DMA at 1.3416 and then the daily cloud base at 1.3386.
Sterling Chart:


(Paul Spirgel is a Reuters market analyst. The views expressed are his own)