Overview

GBP/USD maintains a bullish bias, repeatedly probing critical resistance near its 2025 high at 1.3633. With risk sentiment stabilizing from recent geopolitical tensions, market attention is shifting firmly toward this week's central bank meetings, notably the Federal Reserve and Bank of England. Sterling’s near-term outlook hinges significantly upon policy guidance from these institutions and ongoing geopolitical developments.

Technical Landscape and Key Levels

GBP/USD trades in a narrow but bullish consolidation pattern, challenging resistance levels at 1.3600-1.3633. Intraday fluctuations have seen repeated tests above 1.3600, notably reaching 1.3621, yet persistent failures at these highs reflect formidable resistance.

Despite these short-term setbacks, bullish sentiment remains technically supported. Sterling trades above critical moving averages, notably the rising 21-day moving average at 1.3509, providing firm support. The upper boundary of the 30-day Bollinger Band at 1.3683 presents an immediate technical target, with the January 10, 2022 high at 1.3749 as a subsequent key resistance level.

Momentum oscillators indicate bullish momentum, though nearing overbought territory, potentially signaling near-term corrective risks. Continued failure to sustain a close above 1.3633 remains a key risk for sterling bulls.

Central Bank Meetings: Crucial for Direction

Central bank decisions will significantly influence GBP/USD direction this week. The Federal Reserve's June 18 meeting, while expected to hold rates unchanged, remains pivotal due to potential shifts in forward guidance. Market participants anticipate cautious Fed commentary amid global trade uncertainties and geopolitical risks.

Interest Rate Probability Reports suggest expectations of two Fed rate cuts by year-end, despite recent adjustments. Thus, a hawkish Fed statement could quickly dampen bullish sterling sentiment.

The Bank of England’s meeting on June 19, though expected to hold policy steady, will be scrutinized for clues on inflation and growth outlooks. Any hawkish signals from the BoE, against the backdrop of strong UK employment and inflation data, could catalyze a significant bullish breakout in GBP/USD.

Geopolitical Developments and Risk

Geopolitical risks from the Middle East continue to loom. Recent signs of diplomatic efforts by Iran to achieve a ceasefire have stabilized risk sentiment temporarily, bolstering sterling. However, the situation remains fluid, and any renewed escalation could swiftly reverse risk appetite, negatively impacting GBP/USD.

Economic Fundamentals

UK economic indicators continue to support GBP strength, particularly robust labor market data and improving inflation dynamics. Conversely, U.S. data remains mixed, maintaining expectations of Fed policy easing later this year.

Risks and Strategic Positioning

Support at 1.3536 and 1.3509 remains crucial for sterling. Traders should consider tight risk management, particularly if geopolitical tensions escalate unexpectedly. Bullish positions are viable above 1.3633, targeting further gains toward 1.3683 and potentially 1.3749.

Conclusion

Sterling remains positioned for potential gains but must navigate critical resistance levels, central bank policy insights, and ongoing geopolitical developments. Traders should remain vigilant to changing market dynamics, closely monitoring key events.