Sterling is poised to remain range-bound in the near term, with GBP/USD likely oscillating within its established 1.33–1.35 band as markets await clearer signals from geopolitical developments and key inflation data.

The pound moved higher Thursday, pushing toward recent trend highs near 1.35, buoyed by a more optimistic geopolitical backdrop in the Middle East. However, the situation remains volatile. Iran has repeatedly signaled its unwillingness to negotiate its nuclear capabilities — a position at odds with President Donald Trump's insistence that any forthcoming peace deal must include such concessions — creating a meaningful ceiling for risk-on momentum. On the UK domestic front, fiscal concerns persist, with elevated gilt yields reflecting ongoing investor caution. Prime Minister Keir Starmer has managed to quiet some of the political noise recently, but the June 18 Makerfield by-election carries fresh significance following the resignation of Labour MP Josh Simons, which potentially clears the path for Andy Burnham to mount a leadership bid. On the monetary policy front, the Bank of England appears set on a steady near-term course, with futures markets pricing in two 25bp rate hikes in Q4 2026. The Federal Reserve is similarly expected to hold steady in the near term, though STIR futures indicate roughly 60% odds of a 25 basis point hike in December. A recent hawkish shift in Fed expectations, given persistent U.S. inflation, has lent support to the U.S. dollar. Friday's U.S. nonfarm payroll release will be closely watched for clues on Fed policy direction and, by extension, the near-term GBP/USD outlook.

Technically, cable is likely to continue trading within its 1.33–1.35 consolidation range until a more decisive geopolitical development or UK/U.S. inflation-related catalyst emerges.
Sterling Chart:


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