Sterling's recent struggles could persist as escalating tensions in the Strait of Hormuz and new US tariffs introduce significant headwinds for the global economy and, by extension, the UK. The widening conflict in a key oil shipping lane, coupled with President Donald Trump's fresh tariffs against trade partners signals a potential for sustained upward pressure on oil prices and disruptions to international trade. Rising gilt yields are also increasing market scrutiny over UK government financing, weighing on the pound. Although Prime Minister Andy Burnham has pledged fiscal responsibility and hinted at a new economic model, international investors are exercising caution, awaiting clearer details. Considering these intertwined geopolitical and domestic risks, the near-term outlook for sterling appears biased to the downside. Heightened geopolitical tensions, elevated oil prices, and an uncertain fiscal landscape in the UK advocate for a cautious approach to the currency.

Technically, GBP/USD currently finds support at 1.3299, Thursday's low and the 61.8% Fibonacci retracement of 1.3140-1.3556, with further support at 1.3276, the July 2nd daily low. To reverse the bearish sentiment, bulls would need to push the pair above the 200-day moving average at 1.3399 and clear the daily cloud top at 1.3411.
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(Paul Spirgel is a Reuters market analyst. The views expressed are his own)