May 18 (Reuters) - Sterling came under heavy pressure on Friday as rising political uncertainty in Britain undermined sentiment, with the selloff generating important bearish signals on the weekly GBP/USD chart. Prime Minister Keir Starmer is facing mounting pressure after the resignation of a key political rival and signs that other figures within his party are positioning themselves to challenge his leadership. The political backdrop has added to investor unease at a time when British assets are already under strain.

That pressure has been evident in the rates market. British borrowing costs have climbed sharply, with 10-year gilt yields rising to their highest level since 2008, while gilts recorded their steepest decline since April 2025.

Against that backdrop, sterling fell 2% against the dollar last week after peaking at 1.3653, just below April's 1.3658 high. The reversal ended a five-week rally and shifted the near-term technical picture more decisively in favour of the bears.

The scale of the move was particularly significant because it produced a key weekly reversal. GBP/USD pushed above the previous week's high early in the week, but upside momentum faded, sellers regained control and the pair closed below the prior week's close. That pattern points to a loss of bullish momentum and raises the risk that a broader correction is now underway.

The decline also pushed GBP/USD back into its weekly Ichimoku cloud after the pair had broken above it in mid-April. That return into the cloud adds a further bearish technical signal. Unless sterling can re-establish itself above the cloud on a weekly closing basis, the deterioration in the medium-term outlook could deepen.

The immediate levels to watch are support at 1.3304, the early Monday low, and resistance at 1.3432, the 50-week moving average. From a broader technical perspective, the risk is that GBP/USD retraces the full 1.3160-1.3658 rally recorded between March 31 and May 1.
GBP/USD weekly chart:


(Peter Stoneham is a Reuters market analyst. The views expressed are his own)